An employment contract between an employer and employee, usually a senior employee, such as a director, executive manager, etc. Service contracts must be kept at the registered office of a company and be open to inspection by members of the company. The Companies Acts 1980 and 1985 prohibit service contracts that give an employee guaranteed employment for more than five years, without the company having an opportunity to break the employment as and when it needs to. This measure prevents directors with long service agreements from suing companies for loss of office in the event of a takeover or reorganization. See also compensation for loss of office; golden parachute.
Subjects: Financial Institutions and Services — Accounting.