Director Employment Agreement Template for the Philippines

A Director Employment Agreement is your essential contract when appointing executive directors to Philippine corporations. This document combines corporate governance requirements with employment law protections, creating a comprehensive framework that governs your director's relationship with the company. You'll need this agreement to establish clear terms of engagement while ensuring compliance with Philippine corporate and labor legislation.

When do you need this document?

You need a Director Employment Agreement when appointing any executive director who will receive compensation for their services beyond standard director's fees. This includes managing directors, executive directors, and any board member taking on operational responsibilities. The document becomes crucial when your director will have employment rights under the Labor Code while maintaining fiduciary duties under the Corporation Code. You'll also require this agreement for publicly listed companies to meet Securities Regulation Code governance standards, and when foreign directors need clear documentation for work permit applications and tax compliance.

Key legal considerations

Your agreement must carefully balance the director's dual status as both corporate officer and employee. Include comprehensive duty clauses covering fiduciary responsibilities, business judgment standards, and conflict of interest management. Address termination provisions that consider both employment law protections and corporate governance requirements for director removal. Ensure confidentiality and non-compete clauses comply with Labor Code limitations while protecting legitimate business interests. Include detailed compensation structures covering salary, bonuses, benefits, and any equity participation, with clear tax implications outlined. Your agreement should also address indemnification provisions, insurance coverage, and liability limitations consistent with Philippine corporate law standards.

Legal requirements in Philippines

Under the Corporation Code of the Philippines, your director must meet statutory qualifications including stock ownership requirements and residency provisions for certain positions. The Labor Code mandates specific employee benefits including 13th month pay, social security coverage, and leave entitlements that must be clearly addressed in employment terms. For publicly listed companies, the Securities Regulation Code imposes additional governance requirements including independent director qualifications and board composition rules. Your agreement must comply with Bureau of Internal Revenue regulations for proper tax withholding and reporting of director compensation. Include mandatory social security and health insurance enrollment under Republic Act No. 8282 and Republic Act No. 7875. Address foreign currency restrictions under Bangko Sentral ng Pilipinas regulations if compensation involves foreign exchange elements, and ensure compliance with anti-money laundering requirements for significant compensation packages.