
What are the key aspects of a Directors Service Agreement?
- Term of appointment – DSAs can be either fixed duration or ongoing.
- Company car or car allowance
- Detailed bonus provisions including links to personal and company performance
- Company share options
- Authority limits on areas such as spending and decision-making
- Garden leave provisions setting out what the arrangements and restrictions will be during any period of notice.
- Post-termination restrictive covenants, such as restrictions on poaching staff and clients, joining competitors or setting up in competition etc. These clauses are especially important in DSAs to protect the company, since a Director is likely to have privileged access to many of the most important contacts both within and outside of the organisation, and will have a developed understanding of the inner workings of the business.
What are the pros and cons of this contract type?
The pros
- From the point of view of the company are that these contracts are intended to provide a suitable framework for setting out the remuneration package complexities, whilst at the same time providing the key protections that are required to ensure that the company is not put at risk.
- For the Director, the DSA provides much needed certainty and clarity which is necessary when entering into a senior appointment.
The cons
- From the point of view of the company is that often Directors are awarded Fixed Term DSAs which can create a burdensome contractual liability for the company, but they may be willing to accept this in order to secure the talent the company needs to thrive.
- From the Director’s point of view, the cons are often to be found in the restrictive covenants. They are often very extensive and of a longer duration than for non-Director employees, so it is very common to see 12 month restrictions as opposed to 6 month ones.
Important factors to bear in mind
What instances are DSA’s most suitable?
Summary
How can we help?
How much does it cost?
- contains everything you need
- is clear and unambiguous
- contains clauses that are unfair or dangerous for your business
- conforms with current law and regulation

Journey further
In closing
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