On 29 November we reported that an Employment Appeal Tribunal (Mrs Justice Cox, sitting alone) had concluded in Sharpe v Worcester Diocesan Board of Finance Ltd & Anor  UKEAT 0243 12 2811 that the decision of the lower tribunal that the Revd Mark Sharpe, former incumbent of Teme Valley South Benefice in the Diocese of Worcester, could not be a “worker” within the terms of the Employment Rights Act 1996, as amended, was flawed. She allowed the appeal and remitted the case to the Employment Tribunal for a fresh hearing “in accordance with the legal principles set out in this judgment” (para 244). We said then that we hoped to post a longer, more detailed analysis of the case in the near future – so here we go.
Mr Sharpe’s relationship with the local community broke down. He resigned, accusing the Church of failing to support him and claiming that his dog had been poisoned, his telephone lines cut and his tyres slashed because he was considered an “outsider”. He took the DBF and the Bishop of Worcester (in his corporate capacity) to an Employment Tribunal, arguing that he had suffered detrimental treatment as a result of making protected disclosures and that he had been constructively and unfairly dismissed. After a pre-hearing review the ET held that there was no jurisdiction to determine his claims because there was no contract in existence between the parties and, further, Mr Sharpe did not fall within the statutory definition of “worker”. After oral argument, the appeal was stayed pending the decision of the Supreme Court in Methodist Conference v Preston  UKSC 29.
The concept of freehold tenure
Traditionally, the right to the benefice has carried with it the right to the freehold of the parsonage house and a rector with freehold who is below the mandatory retirement age of 70 under the Ecclesiastical Offices (Age Limit) Measure 1975 cannot be removed except in circumstances such as a suspension or inhibition for an ecclesiastical offence (para 72). The few clergy with freehold who were already in their current post on 31 December 1975 and who are still in office do not have a compulsory retirement age at all. An incumbent with freehold can only be removed from office on disciplinary grounds after due process before a court or tribunal: the system does not provide for summary dismissal, whatever the alleged misconduct (para 73): see the Ecclesiastical Jurisdiction Measure 1963 and the Clergy Discipline Measure 2003.
An incumbent (but not a cleric on common tenure) is regarded as having a freehold right to the office and is still often referred to as a freehold office-holder or freehold incumbent (para 20). Cox J noted that the Ecclesiastical Offices (Terms of Service) Measure 2009 and the Ecclesiastical Offices (Terms of Service) Regulations 2009 postdated the appointment of Mr Sharpe in 2005 (para 21), though the committee chaired by Professor McClean which reviewed the terms under which the clergy of the Church of England hold office and the position of the clergy in relation to statutory employment rights concluded that Church of England clergy had no employment status (para 21).
Was there a contract?
The Employment Judge had found that there was no written contract between Mr Sharpe and either of the respondents and held that there was no express contract because:
- though there was an offer of appointment which Mr Sharpe had accepted, that appointment did not take effect as a matter of law until due ceremony was observed, so any contract did not depend upon the will of the parties alone;
- the offer of appointment was made by the patron of the living, Mrs Miles; and, although she was party to an agreement that Mr Sharpe be appointed as rector, it did not follow that she entered into a contract governing the terms and conditions on which he was to undertake his duties there.
- Mrs Miles did not make the offer on behalf of the DBF, which had no part to play in the appointment process; nor had she done so as agent on behalf of the Bishop because she had the right of presentation of the rector and the right of veto – and she could not have been the Bishop’s agent if she had the right to refuse his choice: she was therefore “… acting as her own principal in exercise of the right given to her by ecclesiastical law to appoint to an office … and an intention to create legal relations about terms and conditions on which the office should be performed really cannot be attributed to her” (para 86).
Cox J began from the proposition that, following the Supreme Court’s decision in Preston,
“… it is now unnecessary to refer to all the earlier cases. The Claimant’s first ground of appeal is that the Employment Judge failed to apply binding authority when determining whether there was a contract between the parties. That must now be considered in light of the decisions of the House of Lords in Percy and of the Supreme Court in Preston, the Employment Judge not having the benefit of this latter decision when he was considering the law” (para 111).She pointed out that in Percy v Church of Scotland Board of National Mission  UKHL 73, in which the appellant was a (associate) minister, the main question for the House of Lords was whether or not her relationship with the Church constituted “employment” as defined in s 82(1) Sex Discrimination Act 1975, Ms Percy having contended not that she had entered into a contract of service, but that she had been employed under a contract for services, in that she had agreed personally to execute certain work. On the facts, the majority decision had been that the agreement between Ms Percy and the Board had indeed displayed an intention to create enforceable legal obligations between the parties and that the terms and conditions of her appointment and the services she was required to provide in return for her salary and other benefits, constituted a contract personally to execute work within the definition of “employment” in s 82(1 (paras 116 & 117). Cox J cited with approval the conclusion of Lord Nicholls that the question at issue was not whether Ms Percy held an office but whether she had entered into a contract under which she had agreed to provide defined services and, moreover, that holding an office and the existence of a contract to provide services were not necessarily mutually exclusive (para 119). Following the decisions in Percy and Preston, therefore, it was now “abundantly clear” that the employment status of clergy “… cannot be determined simply by asking whether the minister is an office holder or is in employment … [A]n individual appointed to work in a particular post may be both the holder of an office and an employee working under a contract of service. Whether there is payment of a salary, whether it is fixed, and whether the worker’s duties are subject to the control of the employer are important matters to be considered in determining this issue” (para 146).
As to the distinctions between the facts of the present case and Preston, “the rights and duties of ministers in the Methodist Church were found to arise entirely from their status in the constitution of the Church, and not from any contract” (para 139). There were a number of important differences between the rules and practices of the Methodist Church and those of the Church of England – not least that there is nothing in the Church of England that appears comparable with the process of full connexion and “stationing” in the Methodist Church (paras 159 & 160). In the present case, the Employment Tribunal had rejected the possibility of an express contract
“… in brief terms. The only reasons given for rejecting it are that the written offer and acceptance of appointment on terms did not take effect in law until due ceremony was observed; that the Patron, Mrs Miles, could not be said to be the other contracting party; that she could not be said to have been making the offer of appointment on behalf of either the DBF or the Bishop, whose choice she had the right to refuse; and that an intention to create legal relations about terms and conditions could not be attributed to her” (para 180).
“In failing to carry out the full analysis that Preston now establishes is required, and in approaching the issue by asking whether it was necessary in this case to imply a contract between the parties, I consider that the Employment Judge was in error” (para 181).
She also rejected the Employment Judge’s conclusion that regulation by canon law precluded a contractual relationship. Though many of the terms attaching to the post of rector were dictated or shaped by canon law or explained by the nature of the claimant’s office, that did not preclude a finding that the claimant was also carrying out his work pursuant to a contract of employment (para 185). Nor did the fact that the Bishop had only limited powers as defined by canon law preclude the existence of any consensual, contractual arrangement (para 217).
Was Mr Sharpe a “worker”?
Cox J concluded that the ET’s decision that Mr Sharpe was not a “worker” within the meaning of s 230(3)(b) had been arrived at in error. S 43K(1) Employment Rights Act 1996, as amended, provides that:
“(1) For the purposes of this Part ‘worker’ includes an individual who is not a worker as defined by section 230(3) but who:
(a) works or worked for a person in circumstances in which–
(i) he is or was introduced or supplied to do that work by a third person, and
(ii) the terms on which he is or was engaged to do the work are or were in practice substantially determined not by him but by the person for whom he works or worked, by the third person or by both of them,
(b) contracts or contracted with a person, for the purposes of that person’s business, for the execution of work to be done in a place not under the control or management of that person and would fall within section 230(3)(b) if for ‘personally’ in that provision there were substituted ‘(whether personally or otherwise)’,”.
Cox J took the view that, properly construed, the words “terms on which he is or was engaged to do the work” did not imply the existence of a contract and the Employment Judge had been wrong to determine that issue on that basis (para 237).
In addition, she concluded that Mr Sharpe did not have an unfettered right to delegate the functions of his office to a suitably qualified person, at any time and for any reason, since that was contrary to the provision of Canon C24(8) that “if at any time, a priest is unable to discharge his duties, ‘whether from non-residence or some other cause, [they] shall provide for [their] cure to be supplied by a priest licensed or otherwise approved of by the Bishop of the Diocese.’ ” (para 240). The claimant’s right to delegate could be exercised only in the case of his inability to discharge his duties, not in case of his unwillingness to do so; and he could delegate only to a priest licensed or approved by the Bishop (para 241). He could not simply choose not to attend his parishioners or conduct services (para 243). The claimant’s qualified right to delegate did not detract from the personal obligation to carry out his work. The Employment Judge had applied the wrong test (para 244).
Where the judgment appears to be at least questionable is on the issue of the intention to create an employment relationship.
Classically, a contract in English law is founded upon offer, acceptance, intention to create legal relations, consideration and certainty as to terms. In the present case there were clearly offer, acceptance and consideration; but whether there was either certainty as to terms or an intention to create legal relations in a sense that was understood in the same way by both parties is rather more open to question.
Regulation 9 of the Ecclesiastical Offices (Terms of Service) Regulations 2009 gives clergy who hold office under common tenure the right in certain circumstances to resort to an employment tribunal as if they were “workers” for the purposes of the 1996 Act – but not because they are “workers” for the purposes of the 1996 Act. The Ecclesiastical Offices (Terms of Service) (Amendment) (No.2) Regulations 2010 specifically disapply the 2009 Regulations in the case of an office holder who holds an office in pursuance of a contract of employment. But neither the 2009 nor the 2010 Regulations apply to clergy with freehold. One might reasonably assume, therefore, that if clergy on common tenure can have resort to an Employment Tribunal only because of express legislative provision to that effect, a fortiori clergy who are not on common tenure or engaged under contracts of employment cannot. Moreover, the specific reference in the 2010 amending Regulations to clergy who hold office “in pursuance of a contract of employment” must assume that there is a class of clergy who do not hold office under such terms.
Moreover, the discussion of Preston relates Lord Sumption’s judgment purely to the particular circumstances of Methodist ministers and their relationship with the Methodist Conference, without exploring any of the wider principles of contract law that were considered in that case and which are of wider applicability to the employment status of clergy generally. One might also note in that connexion Macdonald v Free Presbyterian Church of Scotland  UKEAT S/0034/09/BI, in which Lady Smith, sitting alone, upheld the conclusion of the Employment Tribunal that a minister of the Free Presbyterian Church of Scotland was not an employee because it was a foundational belief of the FPCS that it was “not appropriate, in the case of important offices including that of Minister, to set up a legal relationship that is subject to control by the Civil Magistrate” (para 42).
Finally, if the basic reason why Hayley Preston lost in the Supreme Court was that it is the corporate understanding of the Methodist Church that it is not in a contractual relationship with its ministers, why should the judgment in Sharpe have ignored the fact that it is the corporate understanding of the Church of England that it is not in a contractual relationship with its freehold incumbents (or, indeed, with clergy on common tenure)? As Philip Jones points out over at Ecclesiastical Law, “the EAT missed a factual distinction of critical importance to Mr Sharpe’s dismissal claim. Ms Percy and Ms Preston did not have the parson’s freehold“.
It will be interesting to see what the Court of Appeal makes of it all.