Directors' Service Contracts

The appointment of a director is of crucial importance to any company, and having a clear Directors’ Service Contract in place is vital.

This Directors’ Service Contracts section contains a range of terms and conditions that can be used by a company when engaging a director, including:

• contracts with and without payment in lieu of notice (PILON) provisions; and
• contracts with and without bonus and share option arrangements.

Each document in this section is compliant with the Companies Act 2006 and has been updated in line with the state pension changes introduced by the Pensions Act 2014, which removed the need for a contracting-out certificate clause.

These Directors’ Service Contracts are also available in the Employment Documents area in the Directors’ Service Contracts section.

When To Use These Templates

Use these templates when you are:

• offering a director role and need a formal offer letter and service contract;
• documenting the terms on which a director will provide services, including via a management services structure;
• putting in place service contracts with or without PILON and bonus/share option provisions;
• dealing with a director’s long-term service contract that requires member approval under section 188 Companies Act 2006;
• complying with disclosure and record-keeping requirements for directors’ service contracts under section 228 Companies Act 2006.

📁 Templates In This Section

Core director engagement documents

• Directors Employment Offer Letter
• Management Services Agreement
• Director’s Service Contract – Fixed Salary
• Director’s Service Contract - Bonus & Share Option Arrangements

Long-term service contracts – member approval (s.188)

• Letter to Members re Director’s Proposed Long Term Service Contract (s.188)
• Shareholders’ Ordinary Resolution – Approving a Director’s Long Term Service Contract
• Shareholders’ Written Ordinary Resolution to Approve a Director’s Long Term Service Agreement
• Section 188(5) Memorandum to Approve Director’s Long Term Service Contract

Service contract disclosure and access (s.228)

• Letter to Members re Written Memorandum of terms for Director’s Service Contract (s.228)
• Section 228 Memorandum of Terms of Director’s Service Contract
• Letter to Members re Location of Directors’ Service Contracts (s.228)

🔀 Document Toolkit: Typical Sequence (may vary)

1. Agree the commercial terms for the director’s role (for example, fixed salary only or including bonus/share options and PILON).
2. Issue a Directors Employment Offer Letter together with the appropriate Director’s Service Contract or Management Services Agreement.
3. Where the contract qualifies as a long-term service contract under section 188, prepare the necessary member communications and obtain shareholder approval using the relevant resolutions and memorandum templates.
4. Prepare and maintain the section 228 memorandum and ensure members are informed about where directors’ service contracts and memoranda are kept and how they can be inspected.
5. Keep signed contracts, memoranda, resolutions and letters with the company’s statutory and employment records.

Each document in the Directors’ Service Contracts section is drafted to comply with the Companies Act 2006.

These Directors Service Contracts are also available in the Employment package in the Directors' Service Contracts collection.

• Directors Employment Offer Letter
• Management Services Agreement
• Director’s Service Contract – Fixed Salary
• Director’s Service Contract - Bonus & Share Option Arrangements
• Letter to Members re Director’s Proposed Long Term Service Contract (s.188)
• Shareholders’ Ordinary Resolution – Approving a Director’s Long Term Service Contract
• Shareholders’ Written Ordinary Resolution to Approve a Director’s Long Term Service Agreement
• Section 188(5) Memorandum to Approve Director’s Long Term Service Contract
• Letter to Members re Written Memorandum of terms for Director’s Service Contract (s.228)
• Section 228 Memorandum of Terms of Director’s Service Contract
• Letter to Members re Location of Directors’ Service Contracts (s.228)

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