A recent decision by the Employment Appeals Tribunal means that with the exception of the Church of England (which remains a special case) the law appears to be changing in relation to ministerial employment.  

Historically, because the functions of a minister of religion have been considered as vocational and spiritual in nature (and therefore incompatible with the existence of contracts), courts have tended to regard clergy as office-holders whose status has traditionally been regulated by the denomination concerned, rather than as employees whose status is governed by statute law. Accordingly, the rights and responsibilities of ecclesiastical office-holders are not defined by employment contracts and are therefore not subject to statutory employment law.  

Parochial clergy of the Church of England who hold office under common tenure are governed by the Employment Rights Act 1996 which makes it clear that they enjoy rights as if they were employed rather than because they are employed. The Act is careful to state that no relationship of employer and employee is created and therefore they are not employees but office-holders. Church of England clergy with freehold also remain office-holders rather than employees. 

However, following the decision in Moore v President of the Methodist Conference [2010] (15 March 2011)  it is becoming apparent that judges seem more willing to find evidence of an employment relationship between a church and a minister, even where none was originally intended, and appear increasingly reluctant to draw a clear distinction between an 'employee' and an 'office holder'.  

The Moore case involved a Methodist minister in Cornwall who was allowed to sue her church for unfair dismissal because the church effectively treated her as an employee rather than an office-holder and she was therefore deemed to be employed under a contract of service.  

Reports that as a result of this ruling employment rights have now been given to all clergy, paving the way for any church to be sued for unfair dismissal, are inaccurate. Nevertheless, churches will in future need to exercise great caution in case they inadvertently create a contract of service with corresponding rights and obligations.  It will now probably be advisable for churches to obtain  expert legal advice to ensure that ministers are in fact office-holders given an increasingly litigious culture which is also impacting churches. Unless it is clearly agreed otherwise by all parties, if a church treats a minister as though they are an employee, a tribunal is likely to rule in future that there is an implicit employment relationship between the church and its minister. Factors likely to lead to such a conclusion, as in the Moore case, include the stipulation of terms of service, arrangements suggesting the payment of a 'salary' rather than a 'stipend', the provision of accommodation, regulations about working time, and the existence of ministerial supervision and appraisal.  

Although there are some religious liberty exemptions for churches within employment discrimination law, it is usually preferable for most churches to treat a minister as an office-holder where ministers are free to act according to their spiritual calling rather than according to the terms of a contract. With regard to churches, it might otherwise be difficult to justify a decision to remove a minister, for example, on grounds of doctrine or conduct if the matter ended up at an employment tribunal and the minister was deemed to be an employee. 

It is expected that the Methodist Church will appeal against the decision in Moore.