Non-executive director's service agreement

About this document

This is a service agreement that sets out the contract for services between a non-executive director  and a company or other organisation.

It should be used by any company or other organisation with a corporate structure that requires a contract with an independent non-exec director who will provide advice, balance and support.

Being non-executive, the director is not an employee of the organisation. To preserve self-employed status it is important that the service contract, as this one does, clarifies that his or her work is in the nature of consultancy rather than executive employment. For example, the director may be required to attend meetings and “bring independent judgement to bear on relevant issues”.

This contract is particularly strong on the protection of confidentiality and company secrets.

The service agreement is flexible and can be used whether the term of the contract is fixed or running. Use of plain English makes editing easy and allows it to be understood by all parties.

This document provides a balance between protection for the director and for the company. If there is a difference in interests, we have favoured the company. Some of these provisions are required to comply with the law. The explanatory notes, which come with these documents, will guide you as to the importance of specific issues.

The law relating to this service contract

This is a contract for services and wherever possible makes clear that the relationship between the director and the organisation is one of consultancy rather than employment.

The differentiation is important because as an employee, the director has greater rights and both parties are taxed differently. What matters in the judgement of whether the relationship is one of consultancy or employment is the nature of the work not the wording of the contract. However, as far as possible, this agreement suggests the relationship is not one of employment.

When to use this document

This contract is appropriate for any director who is not working full time for the company.

It can also be used by charities and NGOs where the level of senior management is equivalent to the directors of a company

We have other director's service contracts. See this agreement for exexcutive directors and this one for unpaid non-execs.

Features and contents

• Up to date with the latest changes in company law
• Strong on protection of employer's confidential information
• Structured so as to minimise the administrative burden of legal compliance

The contract contains 13 provisions including:

• Appointment and fee
• Director’s status
• Meetings and work
• Responsibilities
• Staff handbook and company policies
• Confidentiality
• Bribery and other corrupt behaviour
• Garden leave
• Procedure after termination
• No competition
• Data protection