It is invaluable in all companies but particularly to smaller companies because it defines roles and responsibilities. A director’s service agreement should include the following information: The IoD Directors' Advisory Service factsheet "What should be included in a Service Agreement for directors?" Post termination – duties, restrictions, liabilities and more, Special Conditions for Non Executive Directors. All rights reserved. ", appointment commencement date, employment commencement date (which may be different), notice required by either party to terminate the agreement, duties of the director including any provisions under which a director may be required to serve on the boards of companies within a group of companies, reference to the statutory duties of directors contained in the Companies Act 2006 (not essential as this will apply in any event but becoming more common), requirement for the director to comply with various company policies including but not limited to the company’s anti-bribery and corruption policy, a right for the company to monitor the director’s email and other communications carried out on company equipment, limitations on the director in engaging in business or professional activities outside the employment, and method of obtaining prior approval if such activity might be acceptable to the company, remuneration details: salary, bonus schemes, share options, medical insurance, life and disability insurance, pensions, company car and/or other benefits including sufficient flexibility for the company to review, amend or withdraw the benefit in appropriate circumstances, details of reimbursement and authorisation for expenses, location of the director’s main place of work, arrangements relating to any future change of location on a permanent or temporary basis and details relating to the requirement to travel for business, entitlements relating to pay during periods of absence due to sickness or accident, the right for the company to require the director to undergo a reasonable medical examination and for the reports from such examinations to be disclosed to and discussed with the company, provisions concerning disclosure of company information which is considered confidential, provisions relating to intellectual property issues, circumstances under which the service agreement may be terminated by the company without notice, where the grievance, disciplinary and appeals procedures may be found (the procedures themselves normally being non-contractual), details of any constraints that may apply to the director on leaving the company including working for a competing organisation, setting up in competition to the company, soliciting or dealing with company clients and poaching senior members of staff, other provisions relating to the termination of the employment including the right for the company to give pay in lieu of notice and/or to place the director on gardening leave and the return of company property, requirement for the director to remove company client/customer details from their social media sites (such as LinkedIn) and to disclose any relevant social media site passwords, specification of which law governs the agreement (eg the law of England), evidence that the agreement has been approved by the board. UpCounsel accepts only the top 5 percent of lawyers to its site. The level of service is clearly explained in the SLA to ensure both parties understand what level of service is to be expected. An agreement can include any understanding between multiple parties about what they promise to do for each other. What Is an Application Service Level Agreement? What Are the Differences between Employment Agreements and Service Agreements? However, most contracts don't end up in court. Was this document helpful? Employment contracts for executive directors are commonly known as service contracts. Executive directors have significant powers and responsibility for numerous aspects of a company's business, and it is for this reason that it is fundamental that a director’s rights and duties are correctly specified and agreed in legally binding document. Much of the time there will be a section in the SLA that outlines how any disagreements are to be resolved between the two parties and not in a court of law. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb. This article intends to summarize some of the major differences between such two agreements. If you require the drafting of an executive director’s service agreement, seek assistance understanding the possible implications of particular provisions, or require help negotiating the specific terms of an agreement, please contact us on 0845 345 5004 SLAs are, in theory, enforceable by a court of law. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb. If one of the parties involved in an SLA is a consumer, then the Consumer Protection Act will apply. Essentially, a contract follows a more formal outline than an agreement. If there is a dispute between parties of a contract, either party can take it to court. An executive director has certain rights and obligations arising as an employee as well as a director of a company. All rights reserved. What Is a Vendor Service Level Agreement? Employment contracts for executive directors are commonly known as service contracts. This contract also recognises that directors will have access to important commercial information and imposes further responsibilities on them to prevent any potential conflict of interest. 9am-5pm, Monday-Friday, excluding UK public holidays. Offer and Acceptance: The contract must include an offer made by one party and the acceptance of that exact offer by the other party. A director’s service agreement should include the following information: appointment commencement date, employment commencement date (which may be different), notice required by either party to terminate the agreement An employment contract (or service agreement) suitable for a director of a private company, a company listed on the Official List and traded on the main market of the London Stock Exchange plc or a company whose securities are admitted to AIM. In a service agreement, if a service provider is injured during working hours, the clients are not obligated to pay any compensation. This website uses cookies to improve your experience while you navigate through the website. A director’s service agreement should include the following information: appointment commencement date, employment commencement date (which may be different), notice required by either party to terminate the agreement