A paper given at the conference of the Law & Religion Scholars Network in Cardiff
Recent cases suggest that the courts are taking a more nuanced approach to the employment status of clergy. But developments in other areas, such as tax law, seem to be based on a narrow view of ‘ministry’ as synonymous with ‘ordained ministry’. So is it time for a rethink?
Introduction: the ‘Servant of God’
In President of the Methodist Conference v Parfitt  ICR 176 a Methodist minister failed in a claim for unfair dismissal before the High Court. It was held that the doctrinal standards of the Methodist Church did not provide for a contractual relationship between the Church and the individual minister; and in the Court of Appeal, at page 186F May LJ famously adopted the dictum of Waterhouse J in the Employment Appeal Tribunal (EAT) below:
‘The concept of a minister as a person called by God, a servant of God and the pastor of His [ie, presumably, God’s] local church members seems to me to be central to the relationship.’
Lord Templeman used the expression again, in Davies v Presbyterian Church of Wales  1 All ER 705:
‘A pastor is called and accepts the call. He does not devote his working life but his whole life to the church and his religion. His duties are defined and his activities are dictated not by contract but by conscience. He is the servant of God.’
On which Peter Edge comments – correctly, in my view – in Legal Responses to Religious Difference (Kluwer Law International 2002, 241) that it was unfortunate that Lord Templeman did not ‘expressly begin his analysis by considering whether there was an intention to create legal relations’. But was the concept of the minister of religion as ‘a servant of God’ ever very helpful in terms of employment law? And what is a ‘minister of religion’ anyway?
Employment status of ministers of religion
As to the employment position of clergy, we appear to have moved away from a position where the courts simply take it as a given that no employment relationship can exist between a religious community and an individual minister and have become much more inclined to analyse the factual situation in the individual case. So in New Testament Church of God v Stewart  EWCA Civ 1004 the Court of Appeal held that the original Employment Tribunal had been entitled to conclude on the facts that Mr Stewart had a contract with the Church. However, Pill LJ was careful to add that his conclusion did not
‘… involve a general finding that ministers of religion are employees. Employment tribunals should carefully analyse the particular facts, which will vary from church to church, and probably from religion to religion, before reaching a conclusion’ .
In Macdonald v Free Presbyterian Church of Scotland  UKEAT S/0034/09/BI, an action by a minister for unfair dismissal arising from his permanent suspension by Synod, Lady Smith concluded in the EAT that the duality of holding an office while at the same time being an employee depended on whether or not the parties had had the intention to create legal relations – and that, in the present circumstances it would be inconsistent with the Church’s declared belief that it was inappropriate that officer-holders such as ministers should be in a legal relationship subject to the control of the ‘Civil Magistrate’ – which is Reformed-speak for the secular authorities and included in this instance Lady Smith herself. She also held that there was no general rule of law either that all ministers of religion were employees or that they were not employees. (In passing, the dispute was also the subject of judicial review proceedings in Macdonald, Re Application for Judicial Review  ScotCS CSOH 55, which was ultimately settled out of court.)
Then in President of the Methodist Conference v Preston  UKSC 29 the Court held by four votes to one that a Methodist minister was not an employee but in a covenant relationship with the Church – harking back to Parfitt – and in Sharpe v The Bishop of Worcester  EWCA Civ 399 the Court of Appeal unanimously reversed the decision of the EAT and held that the office of a freehold incumbent in the Church of England was ‘governed by a regime which is a part of ecclesiastical law. It is not the result of a contractual arrangement’.
Most recently, the ECtHR held in Károly Nagy v Hungary  ECHR 1051 – by four votes to three – that Mr Nagy, a minister in the Hungarian Reformed Church, could make a claim for wrongful dismissal under ecclesiastical law before a Church tribunal but not before the secular courts. Moreover, it held that it was not a violation Article 6 §1 ECHR (right to a fair trial) to exclude from secular jurisdiction claims based on ecclesiastical law. (In passing, when I first read it I thought, given the messiness of the concurrences and partial dissents, that it wouldn’t be in the least surprising if it went to the Grand Chamber: on 2 May the Grand Chamber sifting panel agreed to allow an appeal.)
Varieties of tenure
So a freehold incumbent in the Church of England does not have employment rights under the Employment Rights Act 1996: Sharpe. However, under Regulation 33 of the Ecclesiastical Offices (Terms of Service) Regulations 2009, in certain circumstances clergy who hold office under common tenure (of whom there is an increasing number) can have recourse to an Employment Tribunal under Part X of the Employment Rights Act 1996. However, the Regulations and the enabling Measure make it clear that they confer rights under the 1996 Act as if such clergy were employed, not because they are employed: s 9(6) of the Ecclesiastical Offices (Terms of Service) Measure 2009 states specifically that ‘Nothing in this Measure shall be taken as creating a relationship of employer and employee between an office holder and any other person or body’.
As we have also seen, Methodist ministers in pastoral charges are in a covenant relationship with the Methodist Conference and that relationship does not confer employment rights: see Parfitt and Preston.
In the Church of Scotland, the traditional view has been that parish ministers inducted to a pastoral charge ad vitam aut culpam (broadly equivalent to C of E freehold incumbents) are office-holders: in PAYE70230: PAYE operation: specific employments: clergy and ministers of religion HMRC declares, somewhat mysteriously, that ‘Ministers of the Church of Scotland hold offices. However, they are not in employment’. But nowadays, largely as a consequence of the judgment in Percy v Board of National Mission of the Church of Scotland  UKHL 73,  2 AC 28, that applies only to inducted parish ministers.
Helen Percy was an associate minister rather than an inducted parish minister. The House of Lords concluded that whether or not she was ‘employed’ for the purposes of the Sex Discrimination Act 1975 rested on a false apposition between ‘office’ and ‘employment’ and that, in the absence of any express intention to do so – which in her case there was not – the provisions of the Sex Discrimination Act 1975 could not be set aside. The case was remitted to an Employment Tribunal but ultimately settled. Partly as a result of that judgment, the Church of Scotland subsequently decided to give formal contracts of employment to all associate and assistant ministers – but not to inducted parish ministers who (it seems) remain office holders for the purposes of employment rights.
Turning to the wider implications of the definitions, under the current tax law accommodation can be provided to an employee in certain circumstances without a charge to income tax arising on its value. One of the cases is where the accommodation is provided so that the recipient can do his or her job. Employer provided living accommodation, produced by HMRC and HM Treasury, explains that in order to qualify for the exemption the accommodation must be either:
- necessary for the proper performance of the job (the ‘necessary’ test); or
- customarily provided within that profession for the better performance of the duties of the post (the ‘customary’ test and the ‘better performance’ test).
So, traditionally, ministers of religion have not been liable to income tax on the benefit arising from the occupation of the parsonage house. But that slightly begs the question, what exactly is a ‘minister of religion’ anyway?
As part of a recent Call for Evidence on employer-provided accommodation, officials from HMRC and the Treasury held a series of meetings with interested groups, at one of which I was present. It soon became apparent during that discussion that officials had assumed that ‘ministers of religion’ were ordained. They seemed to equate ‘ministry’ with ‘ordination’ and were rather surprised to be told that there are many Free Church congregations – especially, but not exclusively, in the Baptist tradition – served by full-time stipendiary lay pastors. Nor did they seem to realise that there are stipendiary readers in the Church of England with full-time pastoral duties. I await the Government’s response to the Call for Evidence with keen anticipation.
But what goes around comes around and, inevitably, we have been here before. Because of a permanent slight shortage of local clergy, the Methodist Church in Great Britain used to recruit probationers for ordained ministry – mainly from the US – to serve as assistant ministers on two-year circuit attachments. When the system of visas and work-permits for non-EEA citizens was radically revised, the Church had to stop doing that because, not having yet been ordained, probationers could not easily qualify for a Tier 5 (Temporary Religious Worker) visa. What they were being recruited for was undoubtedly ‘ministry’ – but it was not ordained ministry.
Or, to take the extreme case, almost every Quaker Local Meeting employs a warden, who lives either over the shop or in nearby accommodation provided by the Meeting. The warden looks after the meeting-house generally and arranges and supervises bookings in return for free housing and, sometimes, a small stipend. Quakers do not have ordained clergy in any shape or form: equally, all Quakers are in some sense ‘ministers’ because what they do at Meeting for Worship and what they do pastorally is ‘ministry’. So is a Quaker meeting-house warden a minister of religion? Theologically, I would assert that the answer is ‘yes’: in employment and immigration law, however, the answer would surely be an emphatic ‘no’ – though, so far as I am aware, meeting-house wardens do satisfy the ‘necessary’ test for the benefit-in-kind exemption under tax law.
Are the distinctions still useful or appropriate?
Employment law has become extremely complicated. The ‘servant of God’ approach seems to have withered away; but perhaps the next issue is whether the distinctions between employees, workers and office holders and between contracts of employment, contracts of service and contracts for services are either helpful or likely to lead to a rational conclusion in every individual case.
The existing complexities are not difficult to demonstrate. In Preston, the Court of Appeal held unanimously that Ms Preston was employed by the Methodist Conference, while the Supreme Court held by four to one that she was not. Lady Hale JSC said in her dissent that
‘… the relationship between a minister of religion and her Church, which is a temporal one, is not to be confused with the relationship between a minister of religion and her God, which is a spiritual one … there is nothing intrinsic to religious ministry which is inconsistent with there being a contract between the minister and the Church’. 
She believed, in short, that:
‘Everything about this arrangement looks contractual, as did everything about the relationship in the Percy case. It was a very specific arrangement for a particular post, at a particular time, with a particular manse and a particular stipend, and with a particular set of responsibilities’. 
So in the end, four very senior judges took one view, while another four very senior judges took the opposite one. But, of course, the Supreme Court trumps the Court of Appeal.
But even if Lady Hale was wrong – and we must assume that she was wrong, though my own view is that she and the Court of Appeal were right – what will happen when, one day in the future, a parish minister in Scotland gets across his or her presbytery, gets suspended from ministry by the Judicial Commission of Assembly and ends up in the Court of Session arguing discrimination on the grounds that associate and assistant ministers have enforceable contracts of employment but parish ministers do not? The Kirk might possibly be successful in a plea that the instant case relates to a ‘matter spiritual’ and is therefore unreviewable under the terms of the Church of Scotland Act 1921 – or it might not. But what will not save it is the absence of a public law element in the facts of the case, because (as in Brentnall v Free Presbyterian Church of Scotland 1986 SLT 470), so long as there is a patrimonial interest involved, the Scottish courts are prepared to review the actings of private tribunals. There is no requirement in Scots law for a public law element: see West v Secretary of State for Scotland 1992 SC 385 (IH).
Likewise, the distinction between an ordained minister and a lay minister may be a very convenient rule of thumb for civil servants, but is it any longer an adequate description of the way Churches – and ministry – operate? In England and Scotland, at any rate, the days of the single parish with a single freehold incumbent or parish minister, certainly in rural areas, are pretty well gone for good, while almost all of the Free Churches – certainly in England and Wales – have always operated on the basis that ministry is a cooperative exercise shared between clergy and laity: think of all those Methodist lay preachers whose ministry is an essential part of the ‘circuit plan’. And the situation in Scotland is further complicated by the fact that, in the Presbyterian tradition, elders and deacons are also ordained, though not to the Ministry of Word and Sacrament.
So the more I explore the murky world of employment law, the less enthused I am by the distinctions between ‘workers’, ‘employees’ and ‘office holders’. Whatever the legal-historical reasons for the distinctions, in terms of employment policy they often appear artificial in the extreme. The categories might have meant something – and might even have been helpful – in 1900; but now we live in a world of interns, zero-hours contracts, agency workers, the National Living Wage, individual contractors and suchlike.
So do any of the current distinctions still serve a useful purpose? And might employment status be a suitable topic for future consideration by the two Law Commissions?