Director Service Agreement Ireland: What to Include

Last updated October 2026. General information only, not legal advice.

An executive director usually wears two hats. As a director, they hold an office under the Companies Act 2014 and owe statutory duties to the company. As a full-time manager, they are normally also an employee. A director’s service agreement is the contract that covers the second role: the job, the pay and how it ends. It needs to work alongside the first. This guide sets out the Companies Act rules that affect a service agreement and the clauses it should contain.

Director and employee: two relationships

Appointment as a director does not, by itself, create a contract of employment, and a service agreement does not make someone a director. An executive director who works in the business under a contract of service has the same employment rights as other employees. That includes the right to core written terms within 5 days of starting and the remaining terms within one month, statutory minimum notice, and protection under the Unfair Dismissals Acts, which generally requires 12 months’ continuous service.

The statutory duties continue to apply whatever the contract says. Section 228 of the Companies Act 2014 lists them, including acting in good faith in the interests of the company, acting honestly and responsibly, avoiding conflicts of interest and not using company property or information for personal benefit. See our guide to directors’ duties in Ireland.

Companies Act rules that affect the agreement

Terms longer than five years need shareholder approval

Under section 249, a term in a director’s contract under which the employment continues, or may continue, for more than 5 years, and which the company cannot end by notice or can end only in specified circumstances, must be approved in advance by a resolution of the company in general meeting. A written memorandum of the proposed agreement has to be available to members for at least 15 days before the meeting. Without approval, the term is void to that extent and the agreement is treated as terminable by the company at any time on reasonable notice.

The company must keep a copy available to members

Section 154 requires a company to keep a copy of each director’s service contract, or a written memorandum of its terms if it is not in writing, together with any variations. Members can inspect these free of charge. The requirement does not apply to a contract with less than 3 years left to run, or one the company can terminate within the next 3 years without paying compensation.

The director must declare an interest

Under section 231, a director who is interested in a contract with the company must declare the nature of that interest at a board meeting. A director’s own service agreement is such a contract, so the interest should be declared and recorded in the board minutes when the agreement is approved.

Who sets the pay

Unless the constitution provides otherwise, section 155 says directors’ remuneration is what the board determines from time to time. Aggregate directors’ remuneration must be disclosed in the notes to the company’s financial statements under section 305, although micro companies are exempt.

Removal as a director

Shareholders can remove a director by ordinary resolution under section 146, whatever the constitution or any agreement says. At least 28 days’ notice of the resolution must be given to the company, and the director is entitled to be heard at the meeting. Section 147 preserves the director’s right to compensation or damages for termination of the directorship or of any appointment that ends with it. In other words, shareholders can always remove a director from office, but if doing so breaches the service agreement, the company may have to pay for that.

Payments for loss of office

Section 251 requires particulars of a payment to a director as compensation for loss of office to be disclosed to members and approved by resolution. Payments made in good faith to discharge an existing legal obligation, and genuine damages for breach of contract, are outside that rule. This is one reason termination payments are best dealt with in the service agreement itself.

Key clauses in a director’s service agreement

• Role and duties. Job title, reporting line, and an obligation to comply with the Companies Act duties and the company’s constitution.
• Time commitment and outside interests. Whether the role is full-time and what other directorships or business interests are allowed.
• Remuneration. Salary, bonus, benefits, pension and expenses, and how each is reviewed.
• Term and notice. Fixed or indefinite term and notice on each side, keeping section 249 in mind. Statutory minimum notice from an employer ranges from 1 week to 8 weeks depending on service, and a longer contractual period takes priority.
• Confidentiality and intellectual property.
• Garden leave. A right to require the director to stay away from work during the notice period while still being paid.
• Restrictive covenants. Non-compete and non-solicitation clauses. There is no Irish statute on these. They are enforceable only if they protect a legitimate business interest and are reasonable in duration, area and scope, and the courts may strike out a clause that goes too far instead of narrowing it.
• Termination. Grounds for summary termination, and what is payable on exit.
• Resignation from office. An obligation to resign as a director when the employment ends. The company must notify the Companies Registration Office of the change on Form B10 within 14 days.

Tax and PRSI points

PAYE applies to directors’ pay. Revenue treats a director who owns or controls more than 15% of the ordinary share capital as a proprietary director. Proprietary directors must file an income tax return each year and cannot claim the Employee Tax Credit. PRSI is a separate question: a director who owns or controls 50% or more of the shares is treated as self-employed and pays Class S, while below that level the PRSI class is decided case by case.

Using a template

For an owner-managed or small private company putting a director’s terms on a proper footing, a structured template is a practical starting point. Our Executive Director’s Service Agreement is a self-complete document, and a Non-Executive Director Appointment Letter is available for directors who are not employees. Other company documents are in our shareholder and director documents category. Where the director is also a shareholder, the service agreement should be consistent with any shareholders’ agreement.

If you are negotiating a senior appointment with significant equity or bonus arrangements, or removing a director, speak to a solicitor. You can search the Law Society’s Find a Solicitor directory.

Frequently asked questions

Does a director need a service agreement in Ireland?

A director who also works in the business as an employee is entitled to written terms of employment like any other employee, and a service agreement is the usual way to provide them. A non-executive director who is not an employee normally has a letter of appointment instead.

Can a company remove a director who has a service agreement?

Yes. Shareholders can remove a director by ordinary resolution under section 146 of the Companies Act 2014, with at least 28 days’ notice of the resolution. Section 147 preserves the director’s right to compensation or damages if the removal breaches their contract.

How long can a director’s service contract last in Ireland?

There is no fixed maximum, but under section 249 a guaranteed term of more than 5 years needs prior approval by a resolution of the shareholders. Without it, the term is void to that extent and the company can end the agreement on reasonable notice.

Can shareholders see a director’s service contract?

Yes. Section 154 requires the company to keep a copy of each director’s service contract, and members can inspect it free of charge. Contracts with less than 3 years to run, or which the company can end within 3 years without compensation, are excluded.

Are non-compete clauses in a director’s contract enforceable in Ireland?

Only if they protect a legitimate business interest and are reasonable in duration, geographical area and scope. Irish courts have refused to enforce clauses that were wider than necessary.

Sources: Companies Act 2014, section 249 (revised); Companies Act 2014, section 154 (revised); Companies Act 2014, section 146 (revised); Revenue: directors; WRC: minimum notice.

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