An important recent decision of the Court of Appeal in England and Wales, Sharpe v The Bishop of Worcester  EWCA Civ 399 (30 April 2015) deals with the issue of the “employment status” of members of the clergy. Is a rector, or a priest, or a pastor, or an imam, an “employee”? If so, who exactly is their employer: the local congregation? the governing board of the congregation? a bishop? the local diocese? These are important issues which are mentioned in the case.The question may be important for a number of reasons: for example, for the rights of members of the clergy who believe they have been wrongly dismissed, or the rights of members of the public to take an action against the church or religious body, which may depend on the whether the cleric is an “employee” or not.
The answer offered in England will not be precisely the same as the answer in Australia, but there are many similarities. In this note I will deal with the situation of Christian ministers primarily, although the same issues can be raised in relation to other religions.
In most situations where the question of whether or not someone is an employee has to be resolved, the standard Australian common law tests will provide the answer as to whether someone is an employee or not: ie the “control” test, the Stevens v Brodribb (1986) 160 CLR 16 indicia as supplemented by some of the considerations discussed in more recent cases such as Hollis v Vabu (2001) 207 CLR 21. However, the situation of clergy is unusual and warrants more detailed comment.
In the main Australian recent case in this area, Ermogenous v Greek Orthodox Community of SA Inc  HCA 8; 209 CLR 95 the majority judgment pointed out that even within the broad Christian tradition, practices and terminology may differ vastly:
 No assumption can or should be made that the organisation or institutions of the church and community in and with which the appellant worked in Australia was necessarily similar to the organisation or institutions of the churches of the western or Latin tradition. To take a seemingly small example noted by the Industrial Magistrate, the witnesses before him spoke of the “consecration” of priests but the “ordination” of bishops, reversing the customary usages of the western or Latin tradition. This is no more than one example of the error that may be made if there is an unthinking application of the practices of one tradition to another. Especially is that so if the questions concern the structures of church governance, the relationship between clergy and laity, or the relationship between the community and whatever may be the group or institution that is identified by that community as the “church”.
The difference there referred to was that between the “Western” branch of Christianity (which, until the Reformation owed allegiance to the Pope, the Bishop of Rome) and other “Eastern” versions such as the Greek Orthodox Church, which was being discussed in that case.
The decision in Ermogenous provides an excellent overview of this whole area for Australia, and we may take the different categories discussed there as a guide to some of the different options for legal recognition of the status of clergy. Broadly speaking, the position of a minister of a church may be seen as (1) not governed by legal principles at all, as purely “spiritual”; (2) governed by law but as a public law “office” rather than as a contract; (3) established as a contract but under the category of “independent contractor”; or (4) set up as an employment contract.
(1) The relationship may be purely “spiritual” and not intended to create legal relations
In some circumstances the courts in the past have concluded that the role of the minister in charge of a local congregation is simply not intended by either party to create obligations that are enforceable by the “secular” legal system at all.
Most of these cases have come not come from the “established” church in the UK; as we will see cases involving the Church of England or the Church of Scotland raise slightly different issues and are usually regarded as at least “legal”. But there are cases where the courts have found that the “spiritual” nature of the duties concerned mean that (on the classic contractual analysis) there was no “intention to create legal relations” include, for example, President of the Methodist Conference v Parfitt  1 QB 368, Rogers v Booth  2 All ER 751, and Davies v Presbyterian Church of Wales  1 WLR 323.
These decisions were followed in NSW in Reverend Howard Ian Knowles and The Anglican Property Trust, Diocese of Bathurst  NSWIRComm 157 (22 April 1999), holding that a minister of the Anglican church was employed on a “spiritual basis”.
A number of decisions to similar effect are cited by the High Court majority in Ermogenous at , as relied on by the Full Court of the Supreme Court of SA in its decision. The facts of Ermogenous are that Archbishop Ermogenous had been engaged (to use a neutral word) by the Greek Orthodox Community of SA Inc (an incorporated association) to undertake a range of duties, which included acting as Archbishop of the Greek Orthodox Church in SA, conducting religious services and carrying out other clerical duties. Having been removed from his position in 1994 after working in it since 1970, he claimed that he ought to have been paid annual leave and long service leave owed to him as an employee of the Association.
The Industrial Magistrate at first instance found in favour of the Archbishop, and a judge of the Industrial Relations Court of South Australia upheld this decision. But on appeal to the Full Court of the Supreme Court of SA, the decision was overturned on the basis that there was a long-standing “presumption” that a church and clergyman did not have “intention to create legal relations” under contract law.
The decision of the High Court was that in general it was no longer appropriate to rely on such a presumption (or indeed on other “presumptions” relating to “intention” in this area), and hence that the matter had to be sent back to the Full Court for further consideration of the actual intention of the parties in the relevant circumstances. There were a number of features of the case pointing to the parties all believing that legal obligations were involved, including PAYE deductions and reference to the Archbishop’s “salary”. (See below where we discuss the difference between “salary” and “stipend”.)
The Court also noted that the Association had a high degree of control over the decisions of the Archbishop, even those of a “spiritual” nature- see . Hence the need to revisit the question. In the end, having looked at the matter again, the Full Court on remittal from the High Court held that there was no sufficient reason to overturn the decision of the Industrial Magistrate at first instance, and hence the outcome of the litigation was that the Archbishop indeed was an employee of the Association- see Greek Orthodox Community of SA Inc v Ermogenous  SASC 384 (26 November 2002). Still, as Doyle CJ said, the facts of the particular case were fairly unusual, and it would not be appropriate at all to conclude that henceforth all clergy in Australia were employees.
The issue of whether the contract between the appellant and the respondent is one of employment is not an issue that warrants the grant of leave to appeal. The issue involves the application of well established principles. Although well established, their application to particular circumstances can give rise to difficulty. If anything, that is a reason for caution in granting leave to appeal to raise such a point. Admittedly, the circumstances to which those principles are to be applied in the present case are out of the ordinary. But, to my mind, no general principle will be established in this case for cases involving a contractual relationship between a minister of religion and a church or an entity that in some way retains a minister to exercise his or her ministry. Each case will turn on its own facts, and the most that can be determined in this case is the correct application of the relevant principles to the facts of this case. And, for what it is worth, I think it likely that cases involving the key elements of this case are unlikely to occur at all often. In short, a grant of leave to appeal will involve a close examination of the application of established principles to particular facts, and will not lead to the establishment of any relevant or helpful general principle. That in itself is a reason not to grant leave to appeal, or to rescind leave to appeal. (emphasis added)
In cases where churches, and sometimes other institutions, have been concerned not to signal an employment relationship, sometimes the word “stipend” has been used instead of salary. The word has been regarded as implying a regular payment made for support that does not involve an obligation of “obedience” to orders of the person paying. One of the features of the relationship between a minister and the congregation in which they are placed, of course, is that it is unlike a traditional employment situation, since on most views of the matter, the minister is supposed to provide “spiritual leadership” of some sort, and not just take the orders of the members of the congregation. So, to take an example from the New Testament, see Hebrews 13:17:
Obey your leaders and submit to them, for they are keeping watch over your souls, as those who will have to give an account. Let them do this with joy and not with groaning, for that would be of no advantage to you.
The view that congregational leaders or elders are to be respected and submitted to, of course, does not preclude the view that they ought to receive some money so that they can devote their time to the ministry (see eg Paul writing in 1 Corinthians 9:1-14.)
So the result of Ermogenous seems to be that in Australia, at any rate, it will not normally be assumed that a clergyman simply has a “spiritual” and not legal relationship with the body that engages him or her, or controls their work. Hence it is interesting to see that Mason P in Trustees of the Roman Catholic Church v Ellis  NSWCA 117 said:
 …[It is not] necessary to decide whether a priest in the Roman Catholic Church who is appointed to a Parish is an employee in the eye of the law or otherwise in a relationship apt to generate vicarious liability in his superior.
 Patten AJ observed (at ) that Lepore alone would not prevent the Trustees being directly and vicariously liable for a failure to institute and maintain proper systems and controls. I am prepared to proceed on a similar basis, although I would express it slightly differently so as to allow for the argument ventilated in this Court about a limited reading and application of Lepore. I shall therefore assume that there is factually and legally an arguable case that Father Duggan’s superiors in the 1970s (including the Archbishop of the day) might on some basis be vicariously accountable for his intentional torts. I shall also assume that members of the Church hierarchy (including the former Archbishop) who were responsible for Father Duggan’s appointment and supervision and for processing complaints of misconduct would arguably have been personally accountable in law for their alleged neglect. See generally Stauffer and Hyde, “The Sins of the Fathers: Vicarious Liability of Churches” (1993) 25 Ottawa Law Rev 561. It is wrong to see holding an ecclesiastical office as necessarily incompatible with a legal relationship capable of giving rise to some incidents of an employment relationship (see generally Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95; Percy v Board of National Mission of the Church of Scotland  UKHL 73;  2 AC 28).
However, in the circumstances of Ellis it was not the previous Archbishop who was being sued, it was the current Archbishop, who had no connection with the priest at the time; and the Property Trust had no control over the priest’s actions and was clearly not his employer. So while this carefully worded paragraph leaves open the possibility of “some incidents of an employment relationship”, it by no means decides that priests all work under contracts of employment (or, indeed, under contracts at all.) And these concessions did not lead to liability of the Archbishop or the Property Trust in Ellis’s case. (For more comment on church liability for child abuse, see my previous post on this topic.)
The view that some ministers may have a purely “spiritual” and not “legal” relationship with their church is, however, supported by the a decision involving Methodist ministers in the UK, The President of the Methodist Conference v Preston  UKSC 29 (15 May 2013). Some brief background in previous decisions is necessary, however, before we come to Preston itself. The case is part of a trio of top-level decisions in the UK concerning the employment of clergy, two of which involved the Methodist Church and one the Church of Scotland.
In President of the Methodist Conference v Parfitt  1 QB 368, the first decision, involving the Methodist Church (a “non-established” Protestant denomination having its origins in the ministry of John Wesley), the House of Lords held the minister concerned was not an employee. Reasons differed but at least one of the significant factors was the “spiritual” character of the work.
In Percy v Board of National Mission of the Church of Scotland  2 AC 28 the plaintiff was an “associate minister” of the Church of Scotland (which is something like the “established” church in Scotland, and corresponds to what in Australia we would call the Presbyterian Church), and wanted to bring a sex discrimination claim under the relevant legislation. The legislation did not hinge on the standard “employee” criterion- it was a bit broader, referring to someone who “contracted personally to execute any work or labour”, and so the decision could be confined to that specific phrase. Nevertheless, the House of Lords reviewed the history of the employment status of clergy and explicitly held that there should be no “presumption” that a minister held a non-contractual position; that each case needed to be resolved by a careful review of the specific arrangements. In Ms Percy’s case the details of her job offer and other conditions meant that it was a contractual arrangement.
Finally, then, in Preston, the issue of Methodist ministers came up again. The Supreme Court did not directly depart from Percy, but it has to be said that the feel of the decision is quite different. The majority (Lady Hale dissented) looked carefully at the various documents and arrangements under which Ms Preston had been appointed as a Methodist minister in charge of a local church, and concluded that when viewed together they did not show a contract had been entered into. A candidate for the ministry had to be ordained by a Session of the church and was then “stationed” where the Church needed them to operate. Formally they could be sent anywhere they were required, the Church not needing their consent to the posting. They could not resign their “connexion” at will, needing permission of a central Church body. Their ordination was to a “life-long presbyteral ministry of word, sacrament and pastoral responsibility”- see .
The comments at  reflect the difference between “salary” and “stipend” noted above:
Section 80 of the standing orders provides for the “support and maintenance” of ministers. Under standing order 801, all ministers in active work and all stationed probationers are entitled to a stipend throughout their ministry, including periods of unlimited duration when they may be unable to perform their duties on account of illness or injury. In addition, they are entitled under standing order 803 to a manse to serve as a home and as a base for their ministry. Neither the stipend nor the manse are regarded by the Methodist Church as the consideration for the services of its ministers. They regard them as a method of providing the material support to the minister without which he or she could not serve God. In the Church’s view, the sale of a minister’s services in a labour market would be objectionable, as being incompatible with the spiritual character of their ministry. (emphasis added)
As noted previously, Lady Hale dissented. It has to be said, I think, that it is more likely that her Ladyship’s view would be followed in an Australian court, than that of the majority. As she notes, while it can be conceded that the work of a minister is of a “spiritual” nature, that is not inconsistent with there being legal relationships in place- eg see . She also notes that it would be unthinkable that if a minister were denied payment of his or her stipend at all, or were threatened for no reason with eviction from their “manse” (church provided accommodation), that the courts would not come up with a legal remedy. While Lord Sumption (for the plurality) at  dismissed this argument as irrelevant to the present case, suggesting that probably some remedy would be found in the law of trusts, I think her Ladyship is correct to say that the existence of legal remedies in this area do point to a contractual basis for the arrangement.
So, in sum, the argument that clergy enjoy only a “spiritual” and not a legal basis of engagement may be supported in some cases; though it seems a bit hard to believe that an Australian court today would, in light of the comments in Ermogenous, rule the same way except in a very unusual situation.
(2) The position may be an “office” subject to public law, not private law obligations
Another possibility is that a clergyman might be viewed as the holder of an “office”. Lord Sumption probably provides the best recent overview of this concept in Preston at :
[The] distinction between an office and an employment… is that an office is a position of a public nature, filled by successive incumbents, whose duties were defined not by agreement but by law or by the rules of the institution. A beneficed clergyman of the Church of England is, or was until recent measures modified the position, the paradigm case of a religious office-holder. But at an early stage curates in the Church of England were recognised as having the same status for this purpose: see In re Employment of Church of England Curates  2 Ch 563. The position of other ministers was taken to be analogous. In Scottish Insurance Commissioners v Church of Scotland (1914) SC 16, which concerned an assistant minister in the United Free Church of Scotland, Lord Kinnear said at 23 that the status of an assistant minister “is not that of a person who undertakes work defined by contract but of a person who holds an ecclesiastical office, and who performs the duties of that office subject to the laws of the Church to which he belongs and not subject to the control and direction of any particular master.” In Diocese of Southwark v Coker  ICR 140, the Court of Appeal held that a stipendiary assistant curate was not an employee. They held that his duties were derived from his priestly status and not from any contract. Both Mummery LJ (at 147) and Staughton LJ (at 150) considered that there was a presumption that ministers of religion were office-holders who did not serve under a contract of employment.
In general it seems unlikely that cases in Australia would be decided on this “public law” basis, as neither the Anglican Church nor any other church is “established” in the sense that the Church of England is. Interestingly the High Court in Ermogenous did seem to use the word “office” in perhaps a more generic sense in the following comments:
 In the present case, any conclusion that the appellant was appointed to an office, let alone an ecclesiastical office, would depend upon the conclusions that are to be reached, first about who it was that appointed or engaged him, and secondly, about what was the entity or organisation within which the “office” existed. Both of those issues require consideration of the structures of the organisation in which the office is said to exist. In the Curates Case and in Paul those issues were readily resolved – by reference, in the former case, to the structures of a church by law established and, in the latter, by reference to the internal rules of the church under which the authority of an assistant minister derived from the licence given to him by the presbytery concerned. By contrast, the question for decision in the present matter required examination of whether “the church” was to be regarded as separate from the respondent and whether the appellant was appointed to an office identified and regulated only by the internal rules of that “church”. It should go without saying that those matters of church structure and governance may very well differ in the present case from those that exist in other churches and communities and that there can, therefore, be no automatic translation of what was decided in the Curates Case or Paul to the present. Whether a conclusion that the appellant had been appointed to an ecclesiastical office would preclude a conclusion that he served in that office under a contract of employment is a question we need not explore.
The final suggestion, that even in some sense a minister held an “office” under the internal rules of an organisation, that would not prevent the minister from being employed under a contract, seems to be the direction that the courts generally are leaning. Even in England, in Preston, Lord Sumption in the majority commented at  that “offices and employments are not always mutually exclusive categories”.
To similar effect is the conclusion of the English Court of Appeal in JGE v The Portsmouth Roman Catholic Diocesan Trust  EWCA Civ 938 (12 July 2012). This is a decision some aspects of which I disagree with; but on the point of employment it seems to be right. The decision concludes that a Roman Catholic priest was not an employee of the local bishop- see eg:
 Although it is perhaps trite to say it, these cases appear to me to establish that the following approach should be followed:
(1) each case must be judged on its own particular facts;
(2) there is no general presumption of a lack of intent to create legal relations between the clergy and their church;
(3) a factor in determining whether the parties must be taken to have intended to enter into a legally binding contract will be whether there is a religious belief held by the church that there is no enforceable contractual relationship;
(4) it does not follow that the holder of an ecclesiastical office cannot be employed under a contract of service.
 Applying those principles to the facts in this case, I am completely satisfied that there is no contract of service in this case: indeed there is no contract at all. The appointment of Father Baldwin by Bishop Worlock was made without any intention to create any legal relationship between them. Pursuant to their religious beliefs, their relationship was governed by the canon law, not the civil law. The appointment to the office of parish priest was truly an appointment to an ecclesiastical office and no more. Father Baldwin was not the servant nor a true employee of his bishop.
A similar outcome was held to follow in the recent case of Sharpe, mentioned above. The case involved the classic example of an “office” under English law, a “beneficed” clergyman. This meant that Rev Sharpe had not been simply appointed to his position by a resolution of the local Parish Council or decision of the Bishop; he was an “office-holder”, holding a “benefice”, which is a parish appointment under a system dating back many centuries in which a local land-holder, the “patron”, has the right to nominate a member of the clergy to the position in the parish. There is a fascinating review of the law of “advowsons” (an “advowson” was the old name for the right to nominate a clergyman to a parish) and how it has changed over the years in the judgement of Lewison LJ. He notes that:
Historically the incumbent’s income came from the glebe. Some benefices were richly endowed and gave their patrons considerable powers of patronage and advancement. In Pride and Prejudice Mr Collins fawns on Lady Catherine de Burgh because she had the gift of the living.
In the circumstances where Rev Sharp had only been appointed after nomination by the local “patron”, where he had signed no agreement with the Bishop or the Parish Council, and where most of his duties were prescribed by the law of the church rather than by agreement with anyone, the Court of Appeal held that he was not an employee, and indeed had no contract with anyone. He had legal obligations, flowing from ecclesiastical law, but no contractual obligations. Hence he was unable to rely on the provisions of unfair dismissal legislation relating to employees and “workers”, in complaining about events which led up to him being forced (as he said) to resign from his parish.
There is an excellent overview of the decision from Russell Sandberg on the Law and Religion UK blog which provides more details. He notes that the decision, while it reaffirms in the particular circumstances the unusual status of a beneficed clergyman, essentially reaffirms the approach which has developed in clergy employment cases in the UK in recent years: that there is no longer any broad “presumption” that a cleric cannot have a contract or be an employee; that the particular circumstances of each case need to be considered. He notes:
Twenty-first century cases have shown that ministers of religion can be employees: it all depends on the facts. This means that the traditional placing of ministers of religion on a list in employment law textbooks of those offices that are not usually regarded as “employees” is now questionable. Ministers of religion are now in the same position as anyone else who wants to prove employment status: they need to point to a contract of employment and, since at least Percy, it has been clear that the simple facts that they are “employed by God” or hold an ecclesiastical office would not on their own mean that they would not be found to be employees.
As we will see, this is now very close to the situation in Australia.
(3) The minister may have a contract, but not a contract of employment
The High Court of Australia in Ermogenous was very clear that a minister of religion may well operate under a contract, even if they have “spiritual” duties.
 That the relationship between a minister of religion and the relevant religious body or group in which, and to which, he or she ministers is, at its root, concerned with matters spiritual is self-evidently true. That the minister’s conduct as minister will at least be informed, if not wholly governed, by consideration of matters spiritual is likewise self-evident. It by no means follows, however, that it is impossible that the relationship between the minister and the body or group which seeks or receives that ministry will be governed by a contract…
In the circumstances the High Court concluded that the Industrial Magistrate had been entitled to find that a contract was in place. They reserved their opinion on whether it was a “contract of employment” or not- see - although as we have noted that issue was decided in favour of the Archbishop really by default because the Full Court on referral deferred to the Industrial Magistrate’s findings of fact.
Acknowledging that it seems likely that an Australian court would find today that a minister of religion was engaged under some sort of contract where there were formal arrangements in place for salary, tax, accommodation, etc, does this mean that all ministers are employees? In my view this is by no means the case. The fundamental “indicia” of employment still start with consideration of the notion of “control”. It may seem unlikely that a congregation that a minister was meant to be leading could be said to exercise “control”. Even denominational officers in general do not exercise a great deal of supervision over their ministers. So it seems to me unlikely that most ministers of religion would be regarded as employees.
Perhaps an example of this, although it is not precisely on this point, is the fact that in Sturt v The Right Reverend Dr Brian Farran Bishop of Newcastle  NSWSC 400 (27 April 2012) Lindsay J, having referred to the cases discussed above, was not able to conclude on the evidence provided of “normal parish work” by the two priests concerned that they were employees of the Bishop. However, this was not crucial to the resolution of the case- the fact that the priests were not employees did not imply that their challenge to the disciplinary procedures could not be heard; that challenge proceeded on the basis that they had the equivalent of a “property” right in their office of priest, and hence had a sufficient interest to challenge the relevant procedures.
(4) The minister might be an employee
I said previously that I thought it unlikely that most ministers of religion would be regarded as employees. One decision of the Victorian County Court, however, goes against this view. In McDermid v Anglican Trusts Corporation for the Diocese of Gippsland & McIntyre  VCC 1406 (20 December 2012) the issue was whether a priest working in the Anglican Diocese of Gippsland could sue either his Bishop or the Church Property Trust for statutory compensation for psychological harm he claimed to have suffered due to bullying. Success depended upon him establishing that he was a “worker” under the Accident Compensation Act 1985 (Vic).
The County Court Judge, O’Neill J, reviewed the arrangements for the priest to be licensed by the local Bishop. He agreed that the Property Trust, which arranged for payment of his stipend, could not be his employer as it exercised no control whatsoever over his appointment or activities- see . His Honour also regarded as irrelevant the fact that s 12 of the Act allowed certain persons to be “deemed” to workers of a religious organisation if regulations were made. (To be frank, this alone in my view is reason to doubt the correctness of the decision. The section clearly seems to assume that at least some religious personnel will not be “workers” under the common law definition of employee. But his Honour said that it left open the option that ministers could be employees at common law.)
His Honour correctly cited Ermogenous and Percy for the proposition that clergy could be said to enter into a contractual relationship. However, having reviewed the circumstances of the appointment and the nature of the bishop’s relationship to the priest, his Honour concluded not only that there was an intention to enter a contract, but also that it was a contract of service which made the priest an employee- see eg para . I must say that it seems to be that, while formally separating the two issues of “contract” and “contract of service”, his Honour could be said to run the two issues together very closely. My view would be that this decision is probably wrong.
In particular a problem can be seen from paras  ff: if the priest was an employee, who was his employer? It was not the Property Trust who paid him; it was not the Appointments Advisory Board, which had recommended his appointment to the Bishop. It was not the Bishop’s Advisory Board, nor could it be said to be “the Diocese” or “the local parish” – these were non-existent entities, of course, as unincorporated associations (all the Anglicans in Gippsland, or all the Anglicans in the area covered by the local parish.) While his Honour explicitly said at  that it was not “a process of elimination”, the fact is that the Bishop was the only other plausible legal person once the others were discounted!
Once a blind alley like this has been reached, it might be suggested that a wrong turning was taken a few corners ago. The difficulty in identifying an employer to my mind illustrates the problems with the conclusion that the priest was an employee.
This is not to say that the view might not be reached in some cases that a minister is an employee, of course. An example from the UK is the decision of the Court of Appeal in New Testament Church of God v Stewart  ICR 282. This of course involved a non-established church officer and was hence much more amenable to a contractual analysis.
To sum up, in Australia at least it still seems likely that a cleric in charge of a local congregation will not usually be an employee. In churches where the local governing body is clearly a legal “person”, through incorporation, then if there are agreements in place it seems likely that there would be a contract, though usually not a contract of employment. In the “traditional” denominations there may still be some lack of clarity. A court would probably, however, be reluctant to conclude that obligations seriously entered into had no legal effect at all, and so would probably aim to find some entity whom it could hold responsible for carrying out duties such as payment and supervision. There will be increasing pressure in the future, no doubt, for even the major “episcopal” denominations to provide a clearly identified “legal person” who can assume responsibility for the actions of clergy.