Director Exit Agreement Template for England and Wales

When a director leaves their position at a company, whether through resignation, retirement, or other circumstances, you need a properly drafted Director Exit Agreement to protect both parties and ensure legal compliance. This essential document provides a structured framework for managing the departure process while addressing key obligations, payments, and ongoing responsibilities under England and Wales law.

When do you need this document?

You should implement a Director Exit Agreement whenever a company director is departing from their role. This includes situations where an executive director resigns to pursue other opportunities, when a non-executive director reaches the end of their term, or when a director is removed following a board decision. The agreement is particularly crucial in circumstances involving potential conflicts of interest, such as when a director joins a competitor, starts their own business in a similar sector, or when there are concerns about confidential information protection. You also need this document when the departing director holds significant share options or equity stakes that require careful handling during the exit process.

Key legal considerations

Several critical legal elements must be addressed in your Director Exit Agreement to ensure enforceability and compliance. Payment terms should clearly specify final salary, bonus entitlements, pension contributions, and any severance arrangements, while being mindful of Employment Rights Act 1996 requirements for statutory notice periods and payments. Confidentiality clauses must be carefully drafted to protect legitimate business interests without being overly restrictive, covering trade secrets, client information, and strategic plans. Return of company property provisions should encompass physical assets, electronic devices, documents, and intellectual property created during the directorship. You should also consider restrictive covenants such as non-compete and non-solicitation clauses, ensuring they are reasonable in scope, duration, and geographical extent to be legally enforceable. Data protection obligations under UK GDPR must be addressed, particularly regarding personal data access and retention after departure.

Legal requirements in England and Wales

Under the Companies Act 2006, you must ensure proper notification procedures are followed when a director resigns or is removed, including filing Form TM01 with Companies House within 14 days of the change. The agreement must comply with statutory director duties that continue even after departure, including the duty not to disclose confidential information and potential continuing fiduciary responsibilities. Employment Rights Act 1996 governs minimum notice periods and statutory redundancy entitlements for executive directors who have employment contracts. You must also consider Equality Act 2010 compliance to ensure the exit process does not constitute unlawful discrimination based on protected characteristics. For directors in regulated sectors, additional requirements under the Financial Services and Markets Act 2000 may apply, including regulatory notifications and fitness and propriety considerations. The agreement should also address any ongoing directorship responsibilities, such as potential personal liability for company debts or regulatory breaches that occurred during their tenure.