Directors Service Agreements

Why Directors need a different type of contract

The Directors of a company play a critical role in any business’s strategy, direction and ultimate success.  Directors are given access to valuable business information.

There is a lot of responsibility on a directors’ shoulders but also a lot of room for them to ‘operate’ in their role.  You need to be sure they have your best interests in mind.  And that you’re covered if they don’t.

The right employment contracts are an essential for any employee, but getting a director’s service agreement or contract (often called a DSA) in place is a valuable investment – one that’s both fit for purpose and compliant.

What is a DSA and what does it contain?

In a nutshell, a DSA includes the ‘basics’ of an employment contract but can be more detailed, extensive and nuanced, given their specialist role and the onerous obligations of a director.

A director’s service agreement has similarities to an employment contract but our recommendation it to include the responsibilities that the director should carry out and the rules under which they should operate.

A basic employment contract that you’d use for a junior employee is unlikely to cover the detail required for the complexities and duties of the role of a company director.   Consider that a director is potentially an employee of the business, may also be a shareholder, and that also their role as director is separate in and of itself.  Separating these different parts of a director’s role in a DSA ensures it’s much easier to establish boundaries.  If a disagreement occurs (and we’ve seen plenty) the employment contract and service agreement clearly set out how the disagreement should be approached.

We regularly draft these sorts of documents and would be very happy to work with you to draft something to suit your business.