Service agreement for a sales director

A sales director holds the company's customer relationships, sets or influences its pricing, is paid largely on results, and is the departure most likely to cost the company revenue. The service agreement has to set the authority over pricing and terms, fix the commission and bonus arrangements so that they can be changed for future periods and enforced for past ones, record that the relationships are the company's, contain covenants and garden leave drafted for someone who knows every customer, and provide for the handover of the pipeline. I draft that agreement for the company for a fixed fee of £995, delivered in five working days.

Who this is for

Companies in England and Wales appointing a sales director, commercial director or chief revenue officer to the board, and companies whose head of sales has been promoted to it.

What matters in a sales director's service agreement

The role, the targets and the authority over pricing and terms

The agreement should state the role (the sales function, its team, the targets and the strategy), the authority to set prices, discounts and terms within board-approved parameters, the contracts the sales director may sign and those requiring the board or another director (contracts above a value, non-standard terms, liability beyond the company's standard cap, exclusivity), and the obligation to use the company's standard terms and approval process; a sales director who has agreed uncapped liability to close a deal has bound the company, and the authority clause is the board's protection.

Commission, bonus and the plan the board can change

The agreement should state the salary, the commission or bonus plan and whether it is contractual or discretionary, when commission is earned (on payment, usually) and paid, the position on leaving and on garden leave, the board's right to set targets and vary the plan for future periods on notice, and clawback with the written consent section 13 of the Employment Rights Act 1996 requires; commission earned is wages and holiday pay must reflect it under the Working Time Regulations 1998 as amended, and the plan should be designed with both in mind, with the remuneration set by the board with the sales director excluded.

The relationships the sales director holds and whose they are

The agreement should state that the customers, prospects, pipeline and relationships are the company's, that the sales director holds them on the company's behalf, that customer data belongs to the company and is kept in its systems under the UK GDPR, and that the sales director may not transfer contacts or pipeline to personal devices or accounts; the clause does not stop customers choosing to follow, but it establishes the goodwill the covenants protect, and the sales director's own network before joining can be scheduled as an exception where the parties agree.

Covenants and garden leave for the person who knows every customer

A sales director justifies the widest covenants a court will enforce: non-solicitation and non-dealing with customers and prospects the company dealt with in a stated final period, non-poaching of the sales team, non-interference with suppliers and partners, and a non-compete in the company's field for a period measured in months, each drafted separately, with a garden leave clause and notice of several months (the statutory minimum under section 86 of the Employment Rights Act 1996 as the floor) and the garden leave period set off against the covenants; garden leave is the protection that works, because a sales director kept out of the market for six months returns to a market that has moved on.

The sales director as a director and the duties that apply

As a director the sales director owes the duties in sections 171 to 177 of the Companies Act 2006, must declare interests in transactions (including deals with companies they or their family have interests in), must report to the board on the sales function and material customer events, and is excluded from voting on their own pay; the agreement should state the obligations, the company keeps it for inspection under section 228, the two-year limit in section 188 applies, and where the sales director holds shares or options the shareholders' agreement and the leaver provisions should match the service agreement.

Termination, handover and the pipeline

The agreement should set the summary termination grounds, the resignation from the board on termination, the handover of the pipeline, forecasts, customer knowledge and relationships in a form the company specifies, the introduction of a successor to key customers during notice or garden leave, the return of all customer data and devices, and the restrictions on what the sales director may say to customers about the departure; payments for loss of office beyond the contract need shareholder approval under section 217 of the Companies Act 2006, and a settlement should deal with commission on deals in progress expressly, because that is where sales director departures are argued.

What it costs

Senior or director service agreement, £995. With properly drafted restrictive covenants and garden leave. Five working days.

Employment contract, £595. One template you can reuse for a grade of staff. Five working days.

Buying online forms the engagement on payment. The scope is what the employment contracts and handbooks page describes, you accept the Terms of Service at checkout, and I email you within four working hours to get started. If you would rather ask something first, email me.

What you get

• A bespoke contract drafted for how you employ people
• Restrictive covenants drafted at a scope a court will uphold
• Confidentiality and intellectual property provisions that put ownership where it belongs
• The statutory particulars, so the document does the job section 1 of the Employment Rights Act 1996 requires it to do
• Flexibility clauses where you genuinely need them, drafted to survive challenge
• Core policies: disciplinary, grievance, sickness absence, equal opportunities, data protection and, increasingly, AI use
• One round of amendments

What is not included

• Acting for employees
• Employment tribunal representation
• Payroll, pensions auto-enrolment and tax
• Immigration and sponsor licence work
• Day to day HR handling, disciplinaries, grievances and redundancy processes

Questions I am often asked

Our sales director brought his contacts with him. Can we stop him taking them when he leaves?

The company's customers, pipeline and data are the company's, and the covenants protect them. Contacts he had before joining can be scheduled as an exception. The agreement draws the line so that both sides know where it is.

Can we change the commission plan for a sales director mid-year?

For future periods, with notice, if the agreement reserves the right. Commission earned under the existing plan is wages and cannot be reduced.

What protects us most when a sales director leaves?

Garden leave: the sales director is paid, bound by the contract and kept out of the market while the company introduces a successor. The covenants protect the period after garden leave ends. The agreement contains both.

Related guidance and services

• Employment contracts and handbooks, £995, the service this page describes
• Shareholders agreement, £995
• Settlement agreements for employers, £795
• Employment contract for a business development manager
• Director service agreement

This page is general guidance for businesses in England and Wales, not advice on your own circumstances. Last reviewed: October 2026. Email geoffrey@caesar.co.uk.