Does a company director need a service agreement?

Corven guide, 7 October 2026

An executive director who works for the company is usually employed by it, and a written service agreement sets out the terms. The Companies Act 2006 adds two rules that apply to directors' service contracts in particular.

Long guaranteed terms need members' approval

Section 188 applies where the guaranteed term of a director's employment with the company is, or may be, longer than two years. Under section 188(2), the company may not agree to that provision unless it has been approved by a resolution of the members. Under section 188(3), the guaranteed term includes a period during which the company cannot end the employment by notice, and, where the company can end it by notice, the period of notice it must give.

The contract must be available for inspection

Section 228(1) requires a company to keep available for inspection a copy of every director's service contract or, if the contract is not in writing, a written memorandum of its terms. Under section 228(3), the copy must be kept for at least one year after the contract ends. Section 228(7) applies the same rules to any variation of the contract.

Why it matters

A written service agreement makes these duties straightforward: there is a document to approve where section 188 applies, and a document to keep available under section 228.

This guide is general information about the law of England and Wales. It is not advice on your situation.