Most directors assume their mandate is clear because they were appointed at a meeting or signed an employment contract. The better starting point is the relationship. What is a director to the company, what is the board responsible for, and what is management responsible for? Answer those questions and the right document, and the clauses it needs, become far easier to see.
That is the thinking behind a service level agreement template for South African directors. It is not a vendor contract and it is not an HR document. It is an internal governance instrument that turns statutory duties into standards you can measure, record and defend.
Why a Director Is Not a Service Provider
The label “service level agreement” suggests a supplier delivering a service for a fee. A director’s position is fundamentally different. The Companies Act imposes fiduciary duties and standards of conduct on every director, whether or not anyone has written down a single task. Those duties come from the office, not from the contract.
This has a practical consequence. You cannot contract out of fiduciary duty, and a document that treats a director like a supplier will mislead everyone who relies on it. What a director SLA can do is describe how those duties are exercised in this company, by this person, in this role. It works as a mandate and a measure, not as a source of the duty itself.
It also explains why an employment contract does not fill the gap. Employment law governs the worker-employer relationship through labour statutes. Directorship arises from company law and carries liabilities no employment clause can remove. Executive directors, who sit in both relationships at once, are where the confusion usually starts.
Step One: Define the Relationship Before the Document
Before drafting anything, settle three questions about where the director sits.
Executive, Non-Executive or Independent?
Each type of director has a different relationship with the company, and the agreement should reflect it. An executive director has management duties as well as board duties, and needs both an employment contract and a governance mandate. A non-executive director has no operational role, so the mandate focuses on oversight, attendance, committee service and access to information. An independent director’s value depends on independence, so the document should protect it.
Board Responsibility or Management Responsibility?
The board directs and oversees the business. Management runs it. A good director SLA keeps that line clear by separating strategic oversight from operational execution. Vague references to “general management duties” blur the line, and they cause the same enforcement problems as having no agreement at all.
What Does This Company Actually Need?
A small private company may only need a short mandate covering core duties and basic reporting. A listed entity needs a framework that deals with King IV, JSE listing requirements and layered committee structures. The relationship determines the document, not the other way round.
What Goes Wrong Without a Defined Mandate
Directors who work off verbal mandates or loose board resolutions run into predictable problems.
Scope Creep
Directors drift into responsibilities outside their expertise or authority, with no formal acknowledgement and no board oversight. Acting beyond your mandate can breach the duty to act within your powers, even when you acted in good faith.
Remuneration Disputes
Shareholders challenge payments for services that were never clearly defined or measured against anything objective. Remuneration for services as a director also has its own approval requirements under the Companies Act, so it needs to be handled deliberately.
Evidence Problems
When a dispute or regulatory inquiry arrives, there is only fragmented minutes and recollection to rely on. Directors then struggle to show what they were meant to do and what they actually did.
Personal Exposure
Section 77 of the Companies Act makes directors personally liable for losses caused by certain breaches of duty, and insurance cover may be restricted for conduct that was undocumented or outside authority. A well-drafted SLA does not remove liability. It sets the baseline against which your conduct is measured, which is evidence that you understood your obligations and worked to meet them.
Essential Clauses for a South African Director Service Level Agreement
Once the relationship is clear, the clauses follow from it.
- Fiduciary duty alignment. Reference sections 76 and 77 of the Companies Act and translate them into behavioural standards for your industry and role. Generic statements about acting in good faith protect no one. Define what reasonable care means in your operating context.
- Role, deliverables and reporting lines. Be precise enough to allow objective assessment, without micromanaging legitimate business judgment.
- Conflict of interest procedures. Go beyond an annual declaration. Set out how conflicts are identified, disclosed and managed in real time, including recusal and records of related-party transactions.
- Information access and decision-making protocols. Directors can only meet their duty of care if they receive timely, adequate information.
- Remuneration tied to governance performance. Link pay to governance quality as well as financial results, and consider clawback provisions for payments based on misstated performance or a later finding of breach.
- Consistency with the MOI. Your agreement must align with the Companies Act and your Memorandum of Incorporation. A provision that contradicts the MOI is void to the extent of the inconsistency, so check each clause against it.
Borrowing Structure from National Treasury and Public Institutions
Public sector frameworks are a useful source of structure, even though they come from a different context. National Treasury publishes draft service level agreements that build performance monitoring into contractual obligations, which makes a helpful benchmark for internal governance documents. You can borrow the emphasis on measurable outputs and regular review cycles without importing the bureaucracy.
The key adaptation is replacing service delivery metrics with governance quality indicators. Where a Treasury template measures turnaround times, a director SLA should track the quality of board papers, engagement with the risk committee, accuracy of regulatory filings and stakeholder communication.
Anchoring matters too. The University of KwaZulu-Natal’s legal services template requires the agreement to be interpreted and implemented in accordance with South African law. Private companies can use the same explicit clause rather than relying on international best-practice guidance that may not hold up locally.
Don’t copy a Treasury template verbatim. Public sector instruments assume different accountability structures than private companies. Take the method, not the content.
Customising the Template for Your Sector and Size
A template is a starting point. Audit each clause against your own circumstances, cutting what is irrelevant and strengthening what addresses your real risks.
Sector rules often add duties beyond the Companies Act. Financial services directors deal with Prudential Authority requirements, healthcare directors with the National Health Act, and mining directors with the Mine Health and Safety Act. An SLA that ignores these is incomplete and may understate your actual exposure.
Proportionality matters as well. Over-engineer an SLA for a small company and you create a compliance burden that defeats the point. Under-specify for a large entity and you leave material gaps.
Our Legal Toolkits for entrepreneurs provide templates already calibrated for South African conditions, built around local legislation and the governance pitfalls that generic international templates miss.
Making the Agreement Part of Your Governance Rhythm
Signing is where active governance starts. Treat the SLA as a living document within a broader legal workflow management system that tracks compliance milestones, triggers review dates and feeds board agendas. Left in a filing cabinet, it goes stale as regulations and the business change.
- Put it on the agenda. Report on SLA performance alongside financial and operational reports, so accountability is routine rather than crisis-driven.
- Minute it. Record SLA-related discussions and resolutions clearly, to build an audit trail of ongoing attention to defined duties.
- Review it annually. Assess each director against the standards, and also whether the standards still fit. Regulatory change, strategy shifts and new board members all call for updates.
- Link it to resolutions. Connect SLA tracking to director decisions and resolutions, so that a resolution cites the clause it implements and a review cites the resolution that supports it. That creates a record that looks systematic rather than reactive.
Securing Your Business with Proper Legal Documentation
A director SLA does not guarantee immunity from liability, and it does not replace legal advice on complex matters. What it provides is clarity: less risk from ambiguity, and a defensible baseline for judging director conduct under South African law.
Start with the relationship, then choose the instrument that fits it. Download a director SLA template from PocketAdvisor’s Legal Toolkits and adapt it to your own governance context.
Frequently Asked Questions
How Do I Write a Service Level Agreement for a Director?
Start by defining the director’s role: executive, non-executive or independent, and where the line falls between board oversight and management. Then use a South Africa-specific template built on Companies Act duties rather than a commercial vendor SLA. Tailor each clause to your company’s size, sector and Memorandum of Incorporation, replace vague aspirations with measurable governance standards, and have counsel review it before signing.
What Must Be Included in a Director Service Level Agreement?
Include fiduciary duty alignment referencing sections 76 and 77 of the Companies Act, a clear separation of oversight from operational tasks, conflict of interest procedures, information access rights, and reporting lines. Remuneration linked to governance performance and consistency with the MOI are also essential. Each clause should reflect your sector’s regulatory environment and company size.
Can You Provide an Example of a Director SLA Template?
PocketAdvisor’s Legal Toolkits include director SLA templates designed for South African company law. They incorporate Companies Act duties, MOI alignment clauses and adaptable governance metrics, with guidance notes explaining the legal basis for each provision.
How Is a Director SLA Different from an Employment Contract?
An employment contract governs the worker-employer relationship under labour law, covering pay, working hours and discipline. A director SLA deals with fiduciary responsibilities arising from company law, including decision-making protocols, statutory duty compliance and governance accountability. Executive directors usually need both, because their obligations come from two separate legal regimes.
Can a Director SLA Limit My Personal Liability?
No. Fiduciary duties and the liabilities attached to them come from the Companies Act and cannot be contracted away. An SLA documents your mandate and the standards you work to, which can support your position if your conduct is questioned, but it does not exclude liability.
