NED Letter of Appointment Template UK | Non-Executive Director Agreement
Appointing a Non-Executive Director without a formal letter of appointment leaves both the company and the NED exposed to disputes over duties, fees, and termination rights. A well-drafted NED Letter of Appointment sets out the scope of the role, time commitment, remuneration, and the basis on which the appointment can be ended, providing legal clarity for all parties. Under the Companies Act 2006, NEDs owe statutory duties to the company, making it essential these responsibilities are documented from day one. Because most NED arrangements are treated as officeholder positions rather than employment or self-employment, IR35 under Chapter 10 ITEPA 2003 rarely applies, but fee payment terms should still align with the Late Payment of Commercial Debts Act 1998. Generate a compliant NED Letter of Appointment now and protect your board relationship from the outset.
Generate your Consulting Agreement free →Key clauses in a Consulting Agreement
Role and Time Commitment
This clause defines the NED's specific responsibilities, board committee memberships, and the expected number of days per year dedicated to the role. Because NEDs are officeholders under the Companies Act 2006 rather than employees, clearly scoping the commitment prevents later disputes about whether additional duties create an employment relationship under the Employment Rights Act 1996.
Fees and Expenses
This clause sets out the annual fee, payment schedule, and expense reimbursement policy applicable to the NED appointment. Specifying payment intervals and a process for raising invoices ensures any overdue amounts can be pursued under the Late Payment of Commercial Debts (Interest) Act 1998, which allows statutory interest of 8% above the Bank of England base rate on late commercial payments.
Termination and Removal
This clause establishes how either party can end the appointment, including required notice periods and provisions for removal under the Companies Act 2006, which permits shareholders to remove a director by ordinary resolution under section 168 regardless of any contractual term. Documenting termination rights protects the company from compensation claims and gives the NED certainty about their position.
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Generate free →Frequently asked questions
Is a NED Letter of Appointment legally required in the UK?
There is no statutory obligation to issue a NED Letter of Appointment, but the UK Corporate Governance Code strongly recommends one for companies applying its principles, and it is considered best practice for all UK businesses. Without a written agreement, disputes about fees, duties, or notice periods will be resolved by reference to whatever can be implied by conduct, which creates significant uncertainty. A written letter also helps demonstrate to HMRC that the arrangement is correctly structured as an officeholder position.
Do IR35 rules apply to Non-Executive Director fees in the UK?
HMRC's longstanding position is that NED fees are generally outside the scope of IR35 because NEDs are treated as officeholders rather than workers providing personal services through an intermediary, meaning Chapter 10 ITEPA 2003 does not typically apply. However, if a NED also provides separate consulting or advisory services to the same company under a distinct arrangement, those additional fees may require an IR35 assessment. It is advisable to keep any consulting engagement clearly separate from the NED appointment and document each under its own agreement.
Can a Non-Executive Director be removed before their appointment term ends?
Yes, under section 168 of the Companies Act 2006, a company's shareholders can pass an ordinary resolution to remove any director, including a NED, before the expiry of their term, regardless of what the letter of appointment states. The company must give the director special notice of the resolution and allow them the right to make representations to shareholders before the vote. A well-drafted letter of appointment should acknowledge this statutory right while also setting out any contractual notice period and confirming whether any fee compensation applies on early termination.
The information on this page is for general informational purposes only and does not constitute legal advice. Contracto generates AI-assisted contract templates — they are not a substitute for advice from a qualified solicitor. For high-value or complex engagements, always seek independent legal review.