DIRECTORS’ SERVICE AGREEMENTS:
Below is a quick checklist of things you will need to include in a Directors’s Service Contract:
1. What is the start date or date of appointment?
2. Is the appointment for a fixed term or is it ongoing?
3. Is the appointment subject to any professional qualifications and do these need to be maintained throughout the period the individual remains a director?
4. What is the director’s job title?
5. Where will the director work? Is travel required and, if so, is it likely the director will need to work overseas for any period or periods exceeding one month? If so, have you thought about currency for payment and accommodation etc in such instances?
6. What hours will the director work and will they be required to do paid/unpaid overtime? Will the Working Time Regulations 1998 apply?
7. What is the director’s salary? When will it be paid and when is it reviewed?
8. If the director is relocating to take the job, will any relocation expenses be paid to them? If so, how much and when?
9. Will the director be paid a bonus and/or commission? · is it contractual (what are the terms?) · is it discretionary (based on targets/company turnover etc)?
10. Does the director qualify for health benefits? · health insurance · private medical cover · life assurance? · PHI (if you provide PHI think about the implications that may have in terms of preventing you from terminating the employment for incapacity)
11. Are any other benefits provided; such as a car allowance or enhanced maternity/paternity/shared parental pay
12. How many days holiday is the director entitled to? Do these increase with length of service? How much can be taken at any one time? Can any holiday be carried over?
13. How many days sick leave can be taken without requiring a sick note and how is long term incapacity dealt with? Is there a right to company sick pay or is it discretionary? If discretionary, think about how you exercise your discretion to ensure not discriminatory.
14. What is the notice period to terminate the contract? Is it mutual? Under what circumstances can you terminate without notice or pay in lieu of notice?
15. Can the contract be terminated and the director paid salary in lieu of notice?
16. Are there any restrictive covenants/confidentiality obligations on the director during the time they are involved in the business or after? If so: · How long? · Are they limited geographically? · Do they relate to a particular business sector? · Do they go no further than is reasonably necessary to protect the company’s legitimate business interests? What about Intellectual property protection?
17. Can the director be put on garden leave when they give or receive notice to terminate employment?
18. Can the director be removed as a director (but not as an employee) if the business is sold?
19. If the contract ends or terminates, are there any things you wish to oblige the director to do? For example; return company property, phone or device?
20. Is there an occupational pension scheme, group pension scheme or will the company operate auto-enrolment or pay into a personal pension scheme?