It was recently in the news (link) that a member of the clergy was considering suing the Church of England for direct sexual orientation discrimination based upon his forced resignation from the role of bishop in 2011. The Equality Act 2010 allows both employees and workers to pursue their employer for discrimination in the workplace. However, the position of the clergy regarding unfair dismissal rights under the Employment Rights Act 1996 (“ERA 1996”) is a bit of a trickier position. This post will therefore explore the employment status of the clergy and what rights they are entitled to as a result of their employment status.
To claim unfair dismissal a Claimant must establish that they have entered into or work under a contract of employment with their employer (s.230(1) ERA 1996). A contract of employment can be a contract of service, implied or express, oral or in writing. Claimants who have an express contract of employment will obviously have no problem satisfying the requirement under s.230(1). Claimants who do not have an express contract of employment will be able to clear this hurdle if they can show that there was mutuality of obligation and that their employer had the ultimate authority in the relationship. The Employment Tribunal will look at the particular facts of the working relationship when deciding whether a contract of employment exists.
The UK courts have traditionally been reluctant to find that a contract of employment exists between a minister of religion and their employer (President of the Methodist Conference v Parfitt  ICR 176). This was principally because of the perceived lack of intention to create legal relations (i.e. a contractual obligation) in spiritual matters. Ministers of religion have tended to be viewed as ‘office-holders’ rather than employees as their position entails the benefit of certain privileges.
However, this was later challenged in Percy (AP) v Church of Scotland Board of National Mission  IRLR 195 when the House of Lords (now the Supreme Court) held that the spiritual nature of the clergy’s work didn’t necessarily preclude them from entering into a contract of employment with their employer. In Percy, there existed terms and conditions which stated the salary of the minister, his duties and responsibilities, and his holiday and accommodation entitlement. Further, it was held in Percy that a minister of religion’s position as an office-holder didn’t necessarily preclude him from being an employee. However, this was a claim under the then-in-force Sexual Discrimination Act 1975 and not a claim for unfair dismissal.
It was later affirmed in New Testament Church of God v Stewart  EWCA Civ 1004 that a minister of religion could be an employee of the church for which he worked and was therefore entitled to claim unfair dismissal under the ERA 1996. This was based upon the Court of Appeal’s view that the fact that the relationship between the Church and the minister of religion was a spiritual one did not preclude the ability for legal relations to be entered into (and therefore a contract of employment). However, the Court of Appeal emphasised that each case would turn on its particular facts and that the results would change from church to church and religion to religion. Employment Tribunals therefore have to carefully analyse both the doctrine and the faith of the particular religion on the facts available to them, as well as the individual’s circumstances.
Whether a minister of religion will be an employee or simply an ‘office-holder’ will be based upon the Employment Tribunal’s consideration of the particular facts of the ‘working relationship’ and the circumstances of the individual minister.
UPDATE: The Court of Appeal in The President of the Methodist Conference v Preston  EWCA 1581 have confirmed that Percy should be followed and that there is a rebuttable presumption that a minister of religion is not under a contractual relationship with their church.