ON APPEAL FROM THE EMPLOYMENT APPEAL TRIBUNAL
MR JUSTICE UNDERHILL (PRESIDENT), MR EVANS, AND
BAILII:  UKEAT 0219_10_1503 &  UKEAT 0219_10_2411
Strand, London, WC2A 2LL
B e f o r e :
Vice President of the Court of Appeal, Civil Division
LORD JUSTICE LONGMORE
SIR DAVID KEENE
| THE PRESIDENT OF THE METHODIST CONFERENCE
|- and -
|PRESTON (Formerly MOORE)
Mr John Bowers QC and Mr James Bax (instructed by Nalders LLP) for the Respondent
Hearing date : 16 November 2011
Crown Copyright ©
Lord Justice Maurice Kay :
"(1) In this Act 'employee' means an individual who has entered into or works under (or, where the employment has ceased, worked under) a contract of employment.
(2) In this Act 'contract of employment' means a contract of service or apprenticeship, whether express or implied, and (if it is express) whether oral or in writing."
"… a correct appreciation of the spiritual nature of the relationship between a minister and the Methodist Church showed that the arrangements between the minister and the Church in relation to his stationing throughout his ministry, and the spiritual discipline which the Church was entitled to exercise over the minister in relation to his cases, were non-contractual; … therefore, the applicant was not employed by the Church under a contract of service and, accordingly, the industrial tribunal had no jurisdiction to consider the applicant's claim of unfair dismissal."
The current arrangements between a Minister and the Church are not precisely the same as pertained at the time of Parfitt but they are substantially similar.
"… we do not believe that the reasoning of Parfitt can be sustained in the light of Percy, even on the same facts."
"The court is bound to refuse to follow a decision of its own which, though not expressly overruled, cannot, in its opinion, stand with a decision of the House of Lords."
"I consider that the starting point of any consideration of the relationship between the Methodist Church and its ministers must be an examination of the faith and doctrine to which they subscribe and they seek to further. The concept of a minister as a person called by God, a servant of God and the pastor of His local church members seems to me to be the central relationship … I am unable to accept that either party to the present proceedings intended to create a contractual relationship … The submission by the Methodist Church that a minister is, in effect, a person licensed by the Methodist Conference to perform the work of a minister in accordance with the doctrine of the church and subject to its discipline is, in my judgment, the most persuasive description of his status and role."
"… in my judgment, the spiritual nature of the functions of the minister, the spiritual nature of the act of ordination by the imposition of hands and the doctrinal standards of the Methodist Church which are so fundamental to that church and to the position of every minister in it make it impossible to conclude that any contract, let alone a contract of service, came into being between the newly ordained minister and the Methodist Church when the minister was received into full connection. The nature of the stipend supports this view. In the spiritual sense, the minister sets out to serve God as his master; I do not think that it is right to say that in the legal sense he is at the point of ordination undertaking by contract to serve the church or the conference as his master throughout the years of ministry.
Equally, I do not think it is right to say that any contract, let alone a contract of service, comes into being between the church and the minister when the minister accepts an invitation from a circuit steward to become a minister on a particular circuit … the arrangements between the minister and the church in relation to his stationing throughout his ministry and the spiritual discipline which the church is entitled to exercise over the minister in relation to his career remain non-contractual." (Pages 182G – 183C)
… the courts have repeatedly recognised what is and what is not a contract of service and I have no hesitation in concluding that the relationship between a church and a minister of religion is not apt, in the absence of clear indications of a contrary intention in the document, to be regulated by a contract of service." (Page 183H)
"… in the particular circumstances of this case the important consideration is whether the parties intended to create legal relations between them so as to make the agreement … enforceable in the courts." (Page 185F)
He set out a lengthy extract from the judgment of Waterhouse J and expressed agreement with it (page 187C). He then went on to conclude, obiter, that if there was a contract, it was not a contract of service.
"There are indeed many arrangements or happenings in Church matters where, viewed objectively on ordinary principles, the parties cannot be taken to have intended to enter into a legally binding contract. The matters relied upon by Mr Parfitt … are a good example of this … The rebuttable presumption enunciated by the Lord President in the present case … may have a place. Without more, the nature of the mutual obligations, their breadth and looseness, and the circumstances in which they were undertaken, point away from a legally binding relationship.
But this principle should not be carried too far. It cannot be carried into arrangements which on their face are to be expected to give rise to legally bindings obligations. The offer and acceptance of a Church post for a specific period, with specific provision for the appointee's duties and remuneration and travelling expenses and holidays and accommodation, seems to me to fall firmly within this latter category.
Further, in this regard there seems to be no cogent reason today to draw a distinction between a post whose duties are primarily religious and a post within the Church where this is not so. In President of the Methodist Conference v Parfitt … Dillon LJ noted that a binding contract of service can be made between a Minister and his Church. This was echoed by Lord Templeman … in Davies v Presbyterian Church of Wales  1 WLR 323, 329. Lord Templeman said 'It is possible for a man to be employed as a servant or as an independent contractor to carry out duties which are exclusively spiritual'.
The context in which these issues normally arise today is statutory protection for employees. Given this context, in my view it is time to recognise that employment arrangements between a Church and its Ministers should not lightly be taken as intended to have no legal effect and, in consequence, its Ministers denied this protection."
Lord Scott and Baroness Hale (to whose speeches I shall return) each expressed agreement with the reasoning of Lord Nicholls.
"Looking for the moment only at the agreement, it seems to me that it has all the ingredients that would be needed for it to be treated by the courts as intended to create legal obligations between the parties and enforceable in the event of a breach of it so as to provide … a legal remedy."
He added (at paragraph 115):
"I would hold, in agreement with Lord Nicholls, that these aspects of the agreement were sufficient to bring it within the scope of the protection that the 1975 Act gives to those whose work is in the field of employment."
Lord Scott expressed agreement with Lord Nicholls, Lord Hope and Baroness Hale and specifically expressed his agreement (at paragraph 137) that
"The agreement between the appellant and the Church of Scotland Board of National Mission, whereunder in return for salary, accommodation and other benefits the appellant undertook to perform the duties of an associate Minister, was an agreement which created legal obligations between the parties."
"I have difficulty in understanding why there should be any presumption against such an intention."
"Ms Percy would clearly have been able to bring legal proceedings had her salary not been duly paid or had she been wrongly deprived of the occupation of her manse. The consideration for these benefits must have been the performance of the duties she had undertaken. In this day and age, the notion that her 'salary', modest though it was, was simply to meet her basic subsistence needs while she devoted herself to her religious and pastoral duties is unrealistic."
"But in so far as those authorities may be explained by a presumed lack of intent to create legal relations between the clergy and their church, I cannot accept that there is any general presumption to that effect. The nature of many professionals' duties these days is such that they must serve higher principles and values than those determined by their employers. But usually there is no conflict between them, because their employers have engaged them in order that they should serve those very principles and values. I find it difficult to discern any difference in principle between the duties of the clergy appointed to minister to our spiritual needs, of the doctors appointed to minister to our bodily needs, and of the judges appointed to administer the law, in this respect."
"If the ministry had not been an office and the relationship between Ms Percy and the body who appointed her had been contractual, it would plainly have been a contract of service. It would have had all the characteristics of a contract of service. The reason why it is not a contract of service is because Ms Percy's duties were not contractual at all. They were the duties of her office."
In other words, he did not consider the relationship to be without legal obligation. It was just that, in his view, the obligation was not contractual. For my part, I have to say that, like Lord Nicholls, I see no reason why an office holder should not also be an employee (paragraph 20).
New Testament Church of God v Stewart
"What Percy's case does, however, is establish that the fact-finding tribunal is no longer required to approach its consideration of the nature of the relationship between a Minister and his Church with the presumption that there was no intention to create legal relations. The earlier cases, as explained, do not exclude that possibility; strong statements in Percy's case leave it open to employment tribunals to find, provided of course a careful and conscientious scrutiny of the evidence justifies such a finding, that there is an intention to create legal relations between a Church and one of its Ministers … The Chairman was not bound by authority to reach a different conclusion. It is recognised that a spiritual motivation in working for a Church does not necessarily preclude an intention to create legal relations.
The guidance to be followed is, in my view, that stated by Lord Nicholls, at paragraphs 23 to 26 of his speech … It was found that there was in Percy's case an intention to create a legally binding relationship but the earlier authorities were not overruled. As Dillon LJ stated in Parfitt's case … 'The spiritual nature of the work and the spiritual discipline under which it is performed must be very relevant considerations when it has to be decided whether or not there is a contractual relationship'. That remains, in my view, a principle of the law of England and Wales."
Pill LJ then went on to consider the possible relevance of Article 9 of the European Convention on Human Rights and Fundamental Freedoms. I shall return to that later. He concluded that, in the circumstances of that case, the ET had been entitled to find an intention to create legal relations and a contract of employment.
"In my judgment, the existence of spiritual duties is certainly a matter to be taken into account but the weight to be given to them must depend on the overall assessment of the evidence … Lord Nicholls and Baroness Hale in particular, with whom Lord Scott agrees, consider that ministers of religion should in appropriate cases have the benefit of modern employment legislation … In this respect the decision in Percy's case is an instance of the courts fulfilling their time-honoured role of updating the common law and making it more suitable for modern circumstances."
She then addressed "the exceptional situation in which the finding of a contract … would offend a religious belief".
"If there is a religious belief that there is no enforceable contractual relationship, then that is a factor in determining whether the parties must be taken to have intended to enter into a legally binding contract."
Discussion and conclusion about authorities
"The conclusion of Dillon and May LJJ in Parfitt and of Waterhouse J whose reasoning they endorsed, was based essentially on the spiritual nature of a minister's role: such other specific points as they made (eg in relation to a minister's stipend) were merely supportive of that general point. But the spiritual nature of a minister's role is the basis also of the presumption against intention to create legal relations which was disapproved in Percy. If it is illegitimate to rely on the spiritual nature of the role as a basis of a general presumption, it must equally, it seems to us, be illegitimate to rely on it without more as the basis of a specific finding. It comes to the same thing: in other words, we can see no difference in substance between saying 'because of the minister's spiritual role there is a presumption against any intention to create legal relations and that presumption has not been rebutted' and saying 'because of the minister's spiritual role (and nothing else) we find that there was no intention to create legal relations'. It seems to us that Lord Nicholls and Lady Hale meant to hold that the spiritual role of a minister could not by itself justify denying contractual effect to an arrangement which otherwise had the indicia of a contract: thus Percy has not simply disapproved the erection of any general principle on the basis of Parfitt but has undermined its actual reasoning, at least as regards whether stationing – as opposed simply to ordination – gives rise to a contract."
I agree with this analysis.
"The offer and acceptance of a church post for a specified period, with specific provision for the appointee's duties and remuneration and travelling expenses and holidays and accommodation, seems to me to fall fairly within this latter category."
Moreover, his subsequent language is redolent with an awareness of legal change. In paragraph 25 he said that there "seems to be no cogent reason today to draw a distinction" and in paragraph 26 he said that "it is time to recognise" that employment arrangements between a church and its ministers should not lightly be taken as intended to have no legal effect "and, in consequence, its ministers denied [statutory] protection".
Was the contract one of employment?
"In our view the Claimant's contract was one of service. Once it is accepted that there is nothing in the Claimant's spiritual role which is inconsistent with her being an employee and once the question whether there was anything special about the nature of the Claimant's remuneration is decided all the indications point one way. She received regular remuneration, including an entitlement to sick pay. She was given accommodation. She was required to engage in an appraisal process, was subject to at least a degree of supervision from the Church and was liable to a disciplinary procedure. Although she did not have to work set hours, there was a clear concept of working time, when she was at the disposal of the Church, and holiday, when she was not. Of course, like any professional she had a great deal of discretion as to how she did her work, but that is in no way inconsistent with a contract of service. Again, we see close parallels with the facts in Stewart …"
Does Article 9 of the ECHR avail the Church?
"(1) Everyone has the right to freedom of thought, conscience and religion; this includes the freedom to change his religion or belief and freedom, either alone or in community with others and in public or private, to manifest his religion or belief, in worship, teaching, practice and observance.
(2) Freedom to manifest one's religion or beliefs shall be subject only to such limitations as are prescribed by law and are necessary in a democratic society in the interests of public safety, for the protection of public order, health or morale, or for the protection of the rights and freedoms of others."
What, it may be asked rhetorically, has this to do with the domestic law of unfair dismissal?
"It is a reflection of the principles stated in Article 9 …"
He then emphasised the importance of Article 9 in domestic law by reference to its treatment in section 13(1) of the Human Rights Act 1998 which provides:
""If a court's determination of any question arising under this Act might affect the exercise by a religious organisation (itself or its members collectively) of the Convention right to freedom of thought, conscience and religion, it must have particular regard to the importance of that right."
"apply equally in my view to a consideration of the relationship between a church and its ministers and whether it may be enforced in the courts of the state." (Paragraph 44)
However, this did not divert him from the conclusion that the ET had committed no legal error in finding Mr Stewart was an employee of his Church.
"… the fact that in an employment dispute one party to the litigation is a religious body or that the other party is a minister of religion does not of itself engage Article 9. There must be religious beliefs that are contrary to or inconsistent with the implication of the contract or a contract of employment. It follows that the implication of a contract of employment is not automatically an interference with religious beliefs."
Lawrence Collins LJ added (at paragraph 66):
"If, contrary to the belief of one of the parties that there is, or should be, no contract, the court gives the other party contractual or statutory remedies, I am doubtful whether that could be regarded as a limitation or, an interference with, the right to freedom of thought, conscience and religion under Article 9."
So am I.
"Christ's ministers in the church are stewards in the household of God and shepherds of his flock. Some are called and ordained to this sole occupation and have a principal and directing part in these great duties but they hold no priesthood differing in kind from that which is common to all the Lord's people and they have no exclusive title to the preaching of the gospel or the care of souls. These ministries are shared with them by others to whom also the Spirit divides his gifts severally as he wills.
It is the universal conviction of Methodist people that the office of the Christian ministry depends on the call of God who bestows the gifts of the Spirit the grace and the fruit which indicate those whom He has chosen."
This reflects "the priesthood of all believers" but it surely does not embrace a doctrinal belief that a Minister who is treated with unfairness or discrimination must be denied common legal redress.
Davies v Presbyterian Church of Wales
"an industrial tribunal cannot determine whether a reasonable church would sever the link between minister and congregation."
"it is possible for a man to be employed as a servant or as an independent contractor to carry out duties which are exclusively spiritual."
Lord Justice Longmore:
Sir David Keene: