God given rights
The Employment Appeal Tribunal (EAT) has now said in the case of The New Testament Church of God -v- Reverend S Stewart that ministers may be entitled to claim unfair dismissal.
What were the basic facts?
A lifelong member of the New Testament Church of God (NTCG), Reverend Stewart was involved at various levels, becoming an ordained minister in 1984. After an audit in 1999 showed that some funds had not been properly accounted for, he was reprimanded and put under supervision.
At around the same time, he became the pastor at the Harrow church and started to receive a salary (based on a local tithe paid by members) through the payroll office in Northampton and joined the church’s pension scheme. If the local branch did not send in enough funds to cover the salary, the church stumped up the cash for one month only.
Although there was no written contract between the parties, Reverend Stewart had to perform certain work for the church (including administrative tasks and spiritual duties), and was required to provide certain information to the Northampton office, on a monthly basis.
In January 2005, another audit showed a number of financial irregularities. The Reverend Stewart was found guilty in June 2005 of unbecoming conduct and misappropriating funds. He was sent a P45 which, like his salary slips, indicated that the church was his employer.
What did the tribunal decide?
Relying on the House of Lords decision in the sex discrimination case of Percy -v- Church of Scotland Board of National Mission (LELR 108; 2006, IRLR 195), the tribunal decided, first of all, that there was a legal agreement between NTCG and the Reverend Stewart.
It reasoned that, although Reverend Stewart was free to arrange much of his work as he saw fit, he had to do so within the rules of the Church of God.
There was, therefore, it said, a connection between them that amounted to a legal agreement, although the “precise nature of those legal relations may not have been clear to all at the time of the agreement.”
But was there a contract of employment between the parties? The tribunal said there was, partly because of the degree of control exercised over Reverend Stewart by the church (particularly in administrative matters), but also because he was treated like an employee for tax and national insurance purposes, as well as in relation to disciplinary matters.
As for the requirement for “mutuality of obligation”, the tribunal said “there was clearly sufficient work for the claimant to carry out and the expected level of services as reflected in the forms he was required to complete and return to the national office, supports the view that there was such an obligation on both parties”.
What did the EAT decide?
The EAT agreed with the tribunal, saying that there was enough mutuality of obligation between the parties to support a contract of employment, despite its finding that the church did not have to pay Reverend Stewart if they did not receive sufficient funds.
It accepted the argument put forward by Reverend Stewart that the church had an obligation to pay him out of the funds that they received from members. Even if there was not enough money, the church still had to pick up the tab for a month.
It agreed that the situation was similar to that of bonus payments – where an employer can be contractually obliged to pay a bonus, but only if the predetermined turnover or profit target is achieved.
It concluded that “it seems to us that the House of Lords have clearly stated that if the relationship between church and minister has many of the characteristics of a contract of employment in terms of rights and obligations, these cannot be ignored simply because the duties are of a religious or pastoral nature.”
It said therefore that there were no grounds to interfere with the tribunal’s decision and dismissed the appeal.
Comment
This case confirms that holding office in a church is not inconsistent with employee status, though much will depend on whether the parties intended to create a legal relationship and if so whether that relationship gave them status as an employee.