This appeal raised the question whether the claimant, an ordained Minister in the Church of England, was working under a contract of employment, or was alternatively a "worker" within the meaning of s.43K ERA after he was appointed as Rector in the Teme Valley South Benefice, in the Diocese of Worcester.  He presented two claims to the ET, complaining that he had suffered detrimental treatment, as a result of making protected disclosures, and that he was then constructively and unfairly dismissed.  After a pre-hearing review the ET held that there was no jurisdiction to determine his claims because there was no contract in existence between the parties and, further, the claimant did not fall within the statutory definition of "worker". The claimant appealed.

The EAT allowed the appeal, which had been stayed pending the decision of the Supreme Court in Preston/Moore v President of the Methodist Conference. The EJ erred by ruling that the limited powers the Bishop had were defined by canon law, precluding any consensual, contractual arrangement.  The EAT said that the fact that they were exercisable in the course of the Bishop's own statutory duties to ensure the proper use of churches was irrelevant. The precise role of the Bishop formed part of the careful examination and analysis that must now be carried out into the rules and practices of the Church, the manner of the claimant's appointment and the particular arrangements made with him in his post.  Determining whether there was an express contract and, if so, who was the appropriate contracting party and whether it was a contract of employment must follow that analysis, applying the legal principles set out in this judgment. The EAT also criticised the EJ's reliance on the respondent's expert witness where the opinions expressed trespassed at times on matters solely within the province of the Employment Judge. The EJ had also erred by ruling that the claimant had an unfettered right to substitute someone else if he did not perform his duties – in fact it was a fettered right because his right to delegate could only be exercised if he was unable, not unwilling, to discharge his duties.

__________

Appeal No. UKEAT/0243/12/DM

EMPLOYMENT APPEAL TRIBUNAL

FLEETBANK HOUSE, 2-6 SALISBURY SQUARE, LONDON, EC4Y 8AE

At the Tribunal

On 1 and 2 November 2012

Judgment handed down on 28 November 2013

Before

THE HONOURABLE MRS JUSTICE COX DBE

(SITTING ALONE)

THE REVEREND SHARPE (APPELLANT)

(1) THE WORCESTER DIOCESAN BOARD OF FINANCE LTD

(2) THE BISHOP OF WORCESTER (IN HIS CORPORATE CAPACITY) (RESPONDENTS)

Transcript of Proceedings

JUDGMENT

**APPEARANCES**

For the Appellant
MR JOHN BOWERS QC (One of Her Majesty's Counsel)
&
MR DAVID CAMPION (of Counsel)
Instructed by:
EAD Solicitors LLP
Prospect House
Columbus Quay
Liverpool
L3 4DB

For the Respondents
MR GEOFFREY TATTERSALL (One of Her Majesty's Counsel)
&
MR MATTHEW SHERIDAN (of Counsel)
Instructed by:
Herbert Smith Freehills LLP Solicitors
Exchange House
Primrose Street
London
EC2A 2HS

**SUMMARY**

JURISDICTIONAL POINTS – Worker, employee or neither

This appeal raises the question whether the Claimant, an ordained Minister in the Church of England, was working under a contract of employment, or was alternatively a "worker" within the meaning of s.43K ERA after he was appointed as Rector in the Teme Valley South Benefice, in the Diocese of Worcester. He presented two claims to the ET, complaining that he had suffered detrimental treatment, as a result of making protected disclosures, and that he was then constructively and unfairly dismissed. After a pre-hearing review the ET held that there was no jurisdiction to determine his claims because there was no contract in existence between the parties and, further, the Claimant did not fall within the statutory definition of "worker".

After oral argument, the appeal was stayed pending the decision of the Supreme Court in [Preston/Moore v President of the Methodist Conference](). **The parties subsequently filed further written submissions on the effect of that decision.

The EAT considered the present state of the law in this area, following Preston, and allowed the appeal, directing that the matter should be remitted for a hearing before a fresh Tribunal in accordance with the legal principles set out in this judgment.

**THE HONOURABLE MRS JUSTICE COX DBE****Introduction**

1. Anthony Sharpe is an ordained minister in the Church of England. From 2005-2009 he was working as Rector in the Benefice of Teme Valley South in the Diocese of Worcester.

1. In two claims presented to the Birmingham Employment Tribunal he complained that he had suffered detriment, as a result of having made public interest disclosures, and that subsequently he was constructively and unfairly dismissed.

1. By a judgment dated 15 February 2012, following a pre-hearing review of both claims, the Employment Judge held that Reverend Sharpe (the Claimant) was neither an employee of the Respondents nor a "worker" within the meaning of s.43K and s.230 of the Employment Rights Act 1996, as amended. The Employment Tribunal therefore had no jurisdiction to determine his claims.

1. The Claimant appealed against that decision to the Employment Appeal Tribunal. Meanwhile, the law relating to the employment status of ministers of religion has continued to receive the attention of the Supreme Court. After the full hearing of this Claimant's appeal, further written submissions from the parties were filed following the judgment of the Supreme Court in The Catholic Child Welfare Society and Others v Various Claimants and the Institute of the Brothers of the Christian Schools and Others [2012] UKSC 56. Subsequently, the Claimant's appeal was stayed pending the judgment of the Supreme Court in The President of the Methodist Conference v Preston [2013] UKSC 29. After that judgment was handed down the parties in this appeal presented further written submissions on its significance in relation to this appeal.

1. This is therefore the judgment of the Employment Appeal Tribunal in the Claimant's appeal, having regard to the Supreme Court decisions in these cases, in particular in the case of Preston, and to the additional submissions of the parties.

**The issues**

1. The issues to be determined at the pre-hearing review were these:

1. Did the Claimant enter into a contract with the Respondents or either of them?

1. If so, was it a contract of service?

1. If not, should the Respondents be permitted to withdraw the concession they had previously made, in relation to the first claim, that the Claimant was a worker?

1. If so, was the Claimant a worker for the purpose of s.43K and s.230 of the Employment Rights Act, enabling him to pursue his public interest disclosure claim?

1. In addition to extensive documentary evidence, the Employment Judge heard oral evidence from the Claimant, and the Respondents called Mr Robert Higham, Diocesan Secretary, and Archdeacon Trethewey, the Archdeacon of Dudley. The Respondents also called Professor McClean, a professor of law at the University of Sheffield, described by the Employment Judge as "an acknowledged expert in the field of ecclesiastical law". In one of his grounds of appeal the Claimant challenges the admissibility of Professor McClean's evidence, which included his opinion evidence as to whether the Claimant worked under a legally binding contract. On behalf of the Claimant Mr Bowers QC, who did not appear below, submits that the Employment Judge erred in admitting this evidence, and in allowing himself to be influenced by expert opinion on matters of law, which were solely for him to determine, and which led to the errors of law which are apparent in his judgment.

1. That criticism aside, the Claimant's principal complaint is that the Employment Judge failed correctly to apply binding authority, failed properly to analyse whether there was in this case the offer and acceptance of a contract, and failed to identify the Bishop as the appropriate contracting party. These failures, Mr Bowers submits, led to erroneous conclusions that no contract of employment existed and that the Claimant was not a worker within the meaning of the legislation.

1. On behalf of the Respondents Mr Tattersall QC submits, essentially, that none of the grounds of appeal has any merit; that the factual findings of the Employment Judge are clear; that the Judge directed himself correctly to the relevant law; and that his reasoning and conclusions are unimpeachable.

**The facts**

1. On the evidence before him the Employment Judge made detailed findings of fact on the structure of the Church, on ordination and appointment to the benefice, on the nature and duties of the rector's office; on the benefits, terms and conditions associated with the tenure of the office of rector; on the rector's relationships with others in the diocese; and on termination of the rector's office.

1. He noted that there was, in the event, relatively little difference between the evidence of the Claimant and the evidence of the Respondents' witnesses as to the material facts, save, notably, on the question of his relationship with the two Respondents and the extent of their control over him.

1. The key findings of fact, for the purposes of this appeal, are as follows.

**Structure**

1. Despite its central position in society as the established Church, the Church of England has no legal personality. It can neither sue nor be sued. The piecemeal approach of legislation over the years has resulted in the title "Church of England", denoting an amalgam of an infinite number of bodies with no clear picture as to how the various parts interact with each other. Ultimate authority lies with the Church's Parliament, the General Synod, subject to the approval of the Westminster Parliament.

1. The Church and its offices are governed by canon law, also referred to as ecclesiastical law, which is derived from a number of sources. The written Canons of the Church of England are periodically reviewed and, since 1920, a major source of canon law has been the Measures passed by the General Synod and its predecessor the Church Assembly. Canon law is part of the law of the land and Measures receive the Royal Assent after approval by the Westminster Parliament.

1. The Church consists of a number of geographical dioceses, each headed by a bishop. The Bishop of Worcester (the second Respondent) is therefore the most senior member of the clergy in the Worcester Diocese. His role is described at Canon C18(1) in the following terms:

"The chief pastor of all that are within his diocese, as well laity as clergy, and their father in God; it appertains to his office to teach and to uphold sound and wholesome doctrine, and to banish and drive away all erroneous and strange opinions; and, himself an example of righteous and godly living, it is his duty to set forward and maintain quietness, love, and peace among all men."

1. The Bishop of Worcester is supported by a suffragan or assistant bishop, the Bishop of Dudley. No point was taken below that some of the Claimant's dealings were with the second Respondent and others with the Bishop of Dudley. References to "the Bishop" in the judgment therefore include both.

1. The Worcester Diocese has two Archdeacons, also of Worcester and Dudley respectively. Within the Dudley Archdeaconry there are seven Deaneries, each with a rural Dean. The Deanery within which the Claimant's benefice fell contained six benefices. Within the Claimant's benefice, Teme Valley South, there were three separate Parishes and therefore three Parochial Church Councils (PCCs).

1. The Claimant was Rector of the Benefice of Teme Valley South from his appointment in January 2005 until his resignation on 7 September 2009.

1. This structure distinguishes the Church of England from other major churches in England which, save for the Roman Catholic Church, have no bishops. Authority in those other churches lies with a national body (for example the Methodist Conference), or with a local Presbytery (the traditional feature of Presbyterian Churches), or with the individual, local congregations (as in the Baptist and Congregational traditions). No other church operates within the context of canon law. The rector's relationships within the Church of England were found to be confined entirely to his diocese, those relationships being between the rector and the parish and the rector and his bishop.

1. Traditionally, the right to the benefice carried with it the right to the freehold of the parsonage house and the rector could not be removed from it during his lifetime. Consequently, the rector was considered to have a freehold right to his office and is still often referred to as a freehold office holder or freehold incumbent.

1. Between 2002 and 2005 Professor McClean chaired a committee charged with reviewing, amongst other things, the terms under which the clergy of the Church of England hold office and the position of the clergy in relation to statutory employment rights. This review led, ultimately, to the enactment of the Ecclesiastical Offices (Terms of Service) Measure 2009 and the Ecclesiastical Offices (Terms of Service) Regulations 2009. Both of these enactments came into force on 31 January 2011, after the period of time with which this case is concerned. The committee considered that members of the clergy had no employment status and recommended against a change in the current position.

1. The Employment Judge noted that the Claimant's refusal to regard Professor McClean as an unbiased witness was "not without some justification"; and it is this which underpins Mr Bower's criticism of the use made of the Professor's evidence. As the judge found, the committee recommended only the granting of certain, specific employment rights (termed "s.23 rights") to members of the clergy. Section 9(6) of the Terms of Service Measure provides that parochial clergy are office holders and that nothing in the Measure is to be taken as creating the relationship of employer and employee between the office holder and any person or body. However, since that provision post dated the Claimant's incumbency the Employment Judge regarded it as irrelevant. He found expressly that it did not preclude a finding that such a relationship existed. Whether such a relationship did exist depended on the specific factual context.

**The Claimant's appointment**

1. The Claimant was ordained in 1999, his ordination being documented by a "letter of orders". Ordination by itself, however, confers no right to any appointment. The appointment of a rector to a vacant benefice is governed by the Patronage (Benefices) Measure 1986 and involves a number of procedures, namely the appointee's nomination (or presentation), institution and induction in accordance with the Canons. The formal right to "present" a priest for appointment to the position of rector still lies in the hands of the "patron" of the parish. In practice, however, there is a tripartite interview panel consisting of the patron, the bishop or his representative and representatives of the PCC, each of those represented having a right of veto over the appointment.

1. The Claimant's appointment process began when the Teme Valley South Benefice became vacant in May 2004. Mr Higham, the Diocesan Secretary, served notice of the vacancy on the Patron of the Parish, Mrs Miles, and upon each of the three PCCs, so that a "statement of needs", as required by the 1986 Measure, could be compiled.

1. The Patron consulted with the Bishop and the PCCs to agree the process of appointment. A "parish profile" incorporating the statutory statement of needs was agreed, containing a description of the parish, its churches, the people and their activities and an expression of the expectations and desires of the parishioners. The Employment Judge likened this document to a person specification.

1. The vacancy was advertised in the Church Times and the Claimant submitted an application. A number of applications for appointment were received and a shortlist of candidates was prepared.

1. An interview panel, consisting of the Bishop of Dudley, the Patron and two representatives from each of the three PCCs, interviewed all the shortlisted candidates. At interview there was no discussion or negotiation as to the terms and conditions of the appointment. This, the judge found, was because the "common terms applicable to all rectors would have been well known to all present". There was an "established set of terms and conditions" in terms of pay, the job that the Claimant was taking on and where he would live.

1. The interview panel unanimously agreed that the Claimant should be appointed. If they had not been unanimous the appointment could not have been made and the vacancy would have been re-advertised.

1. Mrs Miles, as the Patron, then "presented" the Claimant to the Bishop by a formal document. By letter dated 26 October 2004 she offered him the appointment and the Claimant accepted it in writing. By Measure the appointment is only effective in ecclesiastical law when a candidate is "instituted" and "inducted". By Measure the Bishop cannot countermand an offer after it has been made or refuse to institute a priest, save in cases of incapacity.

1. Before being admitted to office the priest must make a Declaration of Assent to the faith of the Church (Canon C15), take the Oath of Allegiance to the Sovereign (Canon C13), and take an Oath of Canonical Obedience to the Bishop (Canon C14(3)). This latter oath, taken initially on ordination, involves promising to "pay true and canonical obedience to the Lord Bishop of … and his successors in all things lawful and honest", and is required to be repeated when taking up any new appointment.

1. The Claimant was duly instituted on 8 January 2005. The Bishop delivered a written deed of institution, investing the Claimant with the "rights and duties" of the Benefice and committing to him the "cure of souls" of the parishioners.

1. Institution was followed immediately by the Claimant's induction, a formal ceremony in which the Bishop placed the Claimant's hand on the key of the church door while the words of induction were spoken (Canon C11(2)). The Claimant was then installed, being led, literally, to the priest's stall.

1. Shortly after his appointment the Claimant received the "Bishop's Papers", which are specific to the Worcester Diocese. These Papers, which were first drawn up in the mid 1990s and have since been revised, were found to contain "information and advice on matters both spiritual and temporal", including details of the stipend and other financial matters.

**The Rector's duties**

1. The incumbent's traditional right to the benefice for life has been diluted in more recent times by Measures making provision for the tenure of the office to be terminated. The benefice is an office which exists independently of the person who fills it and continues to subsist after the

1. The duties of parochial clergy such as this Claimant are enshrined in ecclesiastical legislation, in particular the Canons and the Ordinal. They embrace spiritual, liturgical and doctrinal matters, though the rector's day to day activities are not dictated. The judge found that in practice some Canons are more honoured and observed than others.

1. The principal examples of a rector's duties, as set out in the Canons, were found to be as follows: not to refuse or delay the baptism of any infant within their cure; to present for marriage two persons who apply to be married in the church where they minister, and to advise those approaching matrimony; to minister to the sick; and to bury, according to the requirements of civil law, the corpse of any deceased person within their cure.

1. Canon C25 requires the rector to "keep residence on his benefice", "and to live in the parsonage, not being absent for more than three months without the licence of the Bishop".

1. Canon C24 is an important, general provision setting out the duties to be carried out by the incumbent or, where there is power for him to delegate, by an approved lay person. These general provisions include the duty to ensure that morning and evening prayer is said daily in the church, although it seems that this requirement has now fallen into disuse. Clergy now decide for themselves how and when the prayers are said, and they are routinely said in private. Also included is the duty to celebrate, or cause to be celebrated the Holy Communion on all Sundays and other great feast days; to administer diligently the sacraments and other rites of the Church; to preach or cause to be preached a sermon at least once every Sunday; to instruct parishioners, or cause them to be instructed in the Christian faith, and to use such opportunities to teach or visit schools in the parish as are open to them; to prepare people, or cause them to be prepared for confirmation; to visit parishioners, especially the sick and infirm, and provide opportunities for those who seek spiritual advice; and to consult the PCC on matters of general concern and importance to the Parish.

1. In relation to delegation, Canon C24(8) provides that, if at any time a priest is unable to discharge his duties "whether from non-residence or some other cause, [they] shall provide for [their] cure to be supplied by a priest licensed or otherwise approved by the Bishop of the Diocese". The Bishop does not have the right to licence another priest to exercise the rector's function in the benefice without his permission.

1. The Employment Judge found that incumbents can exercise choice as to how best to pursue the cure of souls, through charitable, administrative, social or educational service. Since day to day activities are not dictated in the Canons, incumbents have considerable flexibility in deciding when and how to perform their duties, and how best to allocate and prioritise their time. However, as happens "with all conscientious professionals" there were often demands upon the Claimant's time and the timing of his duties about which he had no real choice.

**Benefits and terms and conditions**

1. All rectors receive a "stipend", which the Claimant said amounted to a fixed salary for the job he was doing. Whatever the terminology used, however, the judge said the real question was whether the amount and payment of this stipend was a contractual obligation.

1. He found that the stipend is paid under statutory authority and is paid as a fixed, flat rate sum, with archdeacons receiving a higher stipend than rectors and bishops receiving more than archdeacons, effectively rewarding more responsibility with more money.

1. The amount paid is usually fixed by the individual diocese in the light of recommendations from a purely advisory body, the Central Stipends Authority. In Worcester the rate is set by the Diocesan Resources Board, a body established by the Diocesan Synod and the First Respondent, the Worcester Diocesan Board of Finance Ltd (DBF).

1. There is no opportunity for an individual to negotiate the level of his stipend and there is no scale rising commensurately with experience, service or size of parish. If a priest works part time in a remunerated post, such as that of prison chaplain, then the stipend is reduced by the sum earned, rather than pro rata according to the number of days in a week that the priest is engaged on the other work.

1. Each diocese has a Stipends Fund, administered by the DBF, mostly consisting of monies raised from the parishes. Poorer dioceses receive "top up" grants from the Church Commissioners' investment income. There is statutory power to reduce the stipend unilaterally in the event of a shortage of funds.

1. Incumbents also receive various statutory fees, for conducting weddings and funerals for example. These fees are commonly assigned to the diocese, as in the Claimant's case, and are effectively "set off" against the stipend received by the incumbent, in order that he receives the same amount by way of stipend irrespective of any statutory fee revenue. This is because, if they are not assigned, an assumption is made that the rector will receive the same fee income as in the previous year and deductions will be made from the stipend accordingly.

1. Actual payments are made through a clergy payroll, run by the Church Commissioners, the DBF supplying the funds from the Diocesan Stipends Fund. Each year the DBF informs the Commissioners of the stipend level for the dioceses. Tax and national insurance are deducted through the payroll PAYE system. The Employment Judge regarded that as "neutral" in this case because "the Church's and Inland Revenue's accepted treatment of the incumbent for income tax is that of an office holder who, for national insurance purposes, is also "an employed earner"". The Church Commissioners, not the DBF, are the designated body responsible for the "employer's" secondary Class 1 national insurance contributions, although the payments are then re-charged to the DBF. The rector receives an itemised pay statement each month.

1. The DBF provides the funds that the Commissioners advise are required, and the DBF also provides funds to the pension fund administered centrally by the Church of England Pensions Board. The Claimant made an application for ill-health retirement to this Pensions Board.

1. In addition to the stipend, incumbents receive the benefit of their parsonage house or rectory, and they are required by canon law to live there. This remains the position throughout the period of their tenure of office and the property cannot be sold without their agreement. By Measure the parsonage house is vested in the incumbent by virtue of their induction, as are the church and churchyard, although title is limited and more analogous to that of a tenant for life than a freehold owner. The incumbent is not under any obligation to meet the costs of repairing and maintaining these properties, which are maintained by the Diocesan Parsonages Board.

1. Rectors also receive the additional benefits of the payment of council tax, water charges, rectory insurance costs, membership of the non-contributory pension scheme and, in some circumstances, removal or re-settlement grants. They are entitled to apply for a low interest car loan from the Church Commissioners. Working expenses, including travel expenses, are normally reimbursed in full by the PCC, as they were in the Claimant's case.

1. There is no formal regulation of rectors' hours of work, although parochial clergy are encouraged by bishops to take a regular day off work each week, which should be made known to parishioners.

1. The Bishop's Papers contain guidelines as to the amount of holiday rectors should consider taking each year. This appears to be flexible and a matter for the individual incumbent, for which permission is not required. However, it is also made clear that untaken holidays cannot be carried forward.

1. The Bishop's Papers also set out advice to incumbents on the procedures to be followed for the recording of statutory sick pay. Since 2006 the DBF has reduced the stipend by the amount of statutory sick pay paid in the first 28 weeks of illness. The rector's income is thereby maintained at the level of his stipend for that period. After expiry of the statutory sick pay period a further 24 weeks are paid at half the stipend rate. No further payments are made after that time. The Claimant became ill on 4 April 2006. His stipend reduced to one half with effect from 23 October 2006 and ceased altogether with effect from 9 April 2007. The Employment Judge found that,

"The reduction and cessation of sick pay suggested to Mr Sharpe a formal relationship between him and the DBF and exploded the myth that the stipend was about maintaining the rector. It is not difficult to understand his view that the stipend stopped when the job was not being done."

1. Until recently, no formal grievance procedure existed within the Church as a whole, although some dioceses had their own procedures. There was no such procedure in the Bishop's Papers for Worcester and the Claimant agreed that, during the relevant period, he was not aware of any procedure for him to use in order to raise a grievance, although that had since changed.

1. Before the introduction of the Terms of Service provisions there was no formal or informal appraisal system for parochial clergy, although before 2001 the Bishop's Papers did use the term "appraisal" in relation to the system of pastoral reviews. After 2002 the term used was the "Pastoral Review of Ministry", which remained current until the Terms of Service review in 2009. The Employment Judge found this "Pastoral Review" to be an informal review, involvement in which was not compulsory, although there was an expectation that the clergy would give it "high priority". In practice, he found that almost everyone did participate, although no sanction was applied to those who declined to do so. The Judge found that this review had never been "a performance review as such". No review meetings were ever held with the Claimant.

**Relationships with others in the Diocese**

The Bishop

1. An incumbent's relationship with his bishop is governed by the Ordinal and the Canons. There was a dispute between the parties as to the nature of this relationship.

1. The Claimant considered that the importance of his relationship with the Bishop lay in the latter's authority over him. In addition to the Oath of Canonical Obedience, he gave a number of examples of instructions given to him by the Bishop or the Archdeacon, and he referred to other matters which were said to demonstrate the management of him by the Bishop and his Archdeacon. These included Canon C18(7), pursuant to which every bishop has the power to correct and punish the disobedient or criminal within his diocese.

1. The Respondents, on the other hand, described the Bishop as having a pastoral rather than a managerial role, the joint cure of souls being a partnership, involving the joint responsibility of a shared mission. In the Bishop's role as counsellor, there was no place for directions by the Bishop to the rector, and no basis for the Claimant's suggestion that the rector had a subsidiary role, enabling the Bishop to dictate requirements imposed by the Church.

1. The Employment Judge preferred Professor McClean's evidence to that of the Claimant on these matters.

1. In Professor McClean's opinion, the Oath of Canonical Obedience was "largely symbolic" and had little, if any real effect in practice, being no more than a promise to obey the canon law. Any instruction, if the priest was in error, as to the correct interpretation of that law, carried no additional sanction beyond what could result from not observing the particular canon. So far as Canon 18(7) was concerned, the judge found that it "…no longer has any meaning outside the statutory disciplinary procedure", to which I will return below.

1. The approach in practice to the cure of souls was found to be one of joint responsibility between rector and bishop, involving spiritual and pastoral care by the latter, rather than the exercise of managerial control. Any "correction" called for in relation to the holder of ecclesiastical office (Canon C22(4)) could only be achieved by offering advice.

1. A rector is expected to adhere to the main doctrines and tenets of the Church and persistent teaching contrary to those tenets would, he found, be likely to result in disciplinary action under the statutory disciplinary procedure. A priest must not teach outside of the 39 Articles of the Church of England and to do so would be a disciplinary issue. Nevertheless, there is considerable discretion as to the selection by the rector of actual readings from biblical text on particular occasions, and departure from the approved lectionaries would not incur any disciplinary sanction. Nor would the failure to wear the "compulsory" robes of office.

1. The Employment Judge acknowledged that the existence, latterly, of both a grievance procedure and a disciplinary procedure and their relevance in relation to a rector's employment status were matters for him to take into account.

1. He found that, in addition to responsibility for managing PCCs, the Claimant's unchallenged evidence was that he had compulsory responsibility for the management of the church building, the relationship with English Heritage and legal obligations arising out of the operation of the faculty system. He could not just opt in or out of such responsibilities, according to his own will.

1. In addition, the Judge found that the Claimant had civil law responsibility for general health and safety matters in church buildings, including church halls, which meant that he was responsible for such matters as the presence of asbestos, disabled access, sewage discharge and digging up graves.

1. In relation to the various requirements and instructions said to have been given by the Bishop, the Employment Judge said that he was unable to detect any degree of compulsion or instruction in any of the matters relied upon. In relation to correspondence relied on by the Claimant as demonstrating management of him by the Bishop, during their dispute, the Judge found that the correspondence did demonstrate an attempt by the Bishop to manage the problems in his diocese. However, it was clear that any solutions he could propose required the Claimant's consent and the Bishop was not in a position to impose anything without that consent.

1. The Claimant regarded the Bishop's role in the joint cure of souls as one of leadership, which in his experience gave the Bishop an authority that was "very real", and he considered that the authority of the Archdeacons was very similar. Despite some limited flexibility the Bishop's authority, when combined with all the requirements of the canon law, meant that in reality the Claimant's work was mapped out for him and the idea that he had a choice was an illusion.

1. Professor McClean disagreed and described the "apparent powers" of the Bishop in the Canons as effectively "toothless provisions". All that the Bishop could rely on was the hope that his advice, and the deferential respect due to his office would prevail. There was nothing available to him between that hope and the ultimate sanction of seeking the rector's removal under the Incumbents (Vacation of Benefices) Measure 1977, which dealt with situations where there had been a breakdown in relationships between the priest and the parish. The judge appears to have accepted Professor McClean's evidence.

1. On the evidence the Employment Judge found that the Bishop of Worcester was "not in the practice of issuing instructions". This was because it was known both to him and to the priests of his Diocese that he had no right to issue instructions in the same way that an employer or a line manager would issue instructions, which a subordinate would be contractually obliged to obey. At paragraph 78 he said as follows:

"I appreciate that rectors may on occasions defer to their Bishops, accept their greater experience and/or wisdom or simply not wish to create tension by going against their wishes, but there is no obligation upon them to do so. If rectors feel so inclined, there is no sanction against their taking their own line. So long as they stay within the confines of the doctrines of the Church and obey lawful instructions on the very limited issues recognised by the Canons in relation to services and do not overstep the boundaries of personal misconduct in their priestly office, it seems to me that the freedom of rectors to go about their cure of souls in the way they see fit according to their own judgment and conscience is a very real one."

The Diocesan Board of Finance

1. The Judge accepted Professor McClean's evidence that there is no legal relationship between the DBF and the rectors of the diocese. While some interaction does occur between the rector and the DBF, he found that the DBF has never exercised any form of control over the performance of a rector's duties, or been involved in any of the various statutory machineries for terminating a rector's office. The rector provides no service or services directly to the DBF.

The Parochial Church Council and Church Wardens

1. The PCC has a constitutional role, whereas the office of churchwarden is governed by the Churchwarden's Measure, 2001. Professor McClean's evidence, which the Judge appears to have accepted, was that the rector, the churchwardens and the PCC each have statutory responsibilities, but none of them is in a position to control or dictate to any of the others.

Termination of the Rector's Office

1. Termination of the office on other than voluntary grounds is possible only in pursuance of various ecclesiastical laws, as follows:

1. Disciplinary reasons under the Ecclesiastical Jurisdiction Measure 1963 (EJM) or the Clergy Discipline Measure 2003 (CDM);

1. Where the incumbent becomes subject to mental or physical incapacity, dealt with by the Incumbents (Vacation of Benefices) Measure 1977;

1. Cases of pastoral breakdown, dealt with under the same Measure;

1. Pastoral re-organisations under the Pastoral Measure 1983;

1. When the incumbent reaches the mandatory retirement age of 70, established by the Ecclesiastical Offices (Age Limit) Measure 1975.

1. Removal from office on disciplinary grounds requires, in every case, a process before a court or tribunal. There is no possibility of summary dismissal, whatever the misconduct, and any attempt to summarily dismiss a rector could be challenged by way of judicial review. An incumbent may, however, be suspended by a bishop from the exercise of his office, pending disciplinary proceedings. The EJM established a Bishop's Disciplinary Tribunal in each diocese. In doctrinal cases the relevant procedure is that under the EJM. In personal misconduct cases the CDM applies.

1. In both cases there must be a written complaint, including particulars of the alleged misconduct, and written evidence in support of the complaint. The procedure under the EJM is cumbersome and has been invoked only in rare and exceptional cases. The Employment Judge therefore confined himself to consideration of the CDM process.

1. The grounds for instituting disciplinary proceedings under the CDM Measure are where the complaint relates to:

1. The doing of any act in contravention of ecclesiastical law;

1. The failure to do any act required by ecclesiastical law;

1. Neglect or inefficiency in the performance of the duties of office; or

1. Conduct unbecoming or inappropriate to the office and work of a clerk in Holy Orders.

1. The definition of misconduct is generic and no specific examples are referred to. The Judge found that disciplinary proceedings are normally undertaken only in the clearest of circumstances, for example cases involving adultery with parishioners, child abuse or child pornography, or dishonesty involving Parish funds. The Bishop does not have the power to initiate action under the CDM. This must come from a person "with a proper interest" who makes a complaint of his or her own initiative, usually a churchwarden or a member of the PCC.

1. The Bishop refers the complaint in the first instance to the Diocesan Registrar (his legal advisor), who decides whether there is sufficient substance in the complaint to justify disciplinary proceedings. The Registrar notifies the incumbent and, within 28 days of receiving the complaint, will send a written report to the Bishop as to whether the complaint should be dealt with under the CDM and referred to the Bishop's Tribunal. That tribunal is composed of two clergy members, two lay persons and a legally qualified chairman.

1. If, on receipt of this report, the Bishop decides not to dismiss the complaint, he may take one of a number of steps, as follows:

1. He may, with the incumbent's consent, direct that the matter remain on a record maintained by the Diocesan Registrar for a period to be determined by the Bishop, not exceeding five years;

1. He may attempt to bring about a conciliation through an independent conciliator. If conciliation is unsuccessful, the matter is then referred back to the Bishop, who may consider any other option open to him;

1. He may, with the incumbent's consent, impose a penalty; and

1. He may refer it to a designated officer for investigation. After investigation the officer refers the matter to the President of Tribunals of the Bishop's Disciplinary Tribunals. If the President decides there is a case to answer, then the matter goes for a hearing before the Disciplinary Tribunal.

1. The Disciplinary Tribunal can impose or defer a penalty. The range of penalties include the rector's removal from office, disqualification from exercising the function of the priest's order for a specified or unlimited period; suspension; an injunction to do or refrain from doing a specified act; or a rebuke.

Ill health and pastoral breakdown

1. Removal from office is also possible under the 1977 Measure, where the relationship between the incumbent and parishioners impedes the promotion of the Church's "pastoral, evangelistic, social and ecumenical mission in the parish". This can apply where there is no suggestion that the rector has done anything wrong, or where the incumbent is simply unable, by reason of ill-health or infirmity, to discharge adequately the duties attaching to his benefice.

Pastoral reorganisation

1. The office of an incumbent may be abolished as a result of pastoral reorganisation, most usually on the merger of parishes under the procedures in the Pastoral Measure 1983. The Employment Judge found that this was to all intents and purposes a redundancy situation, although the compensation provided is rather better than that provided under the Employment Rights Act 1996. Full compensation for loss of office, stipend and housing is payable until retirement age if the rector is not appointed to another office, unless he unreasonably refuses to accept another appointment. A similar provision applies to those deprived of their benefice on the ground of pastoral breakdown. The Bishop has the power of removal under these provisions.

Age limit and resignation

1. There is a compulsory retirement age of 70 for freehold office holders introduced by the Ecclesiastical Offices (Age Limit) Measure 1975. Further, a rector can voluntarily resign his or her benefice at any time, although there are provisions requiring notice to be given to the bishop in a prescribed form. Ecclesiastical law requires three months' notice from the rector. Such resignation does not, of course, affect the rector's status as an ordained minister of the Church.

**The Tribunal's conclusions**

1. After referring in some detail to the law and to the respective submissions of the parties, the Employment Judge set out his reasoned conclusions from paragraph 161 onwards.

1. He held, first, that the Respondents' application to withdraw their earlier concession that the Claimant was a worker should be granted. There is no appeal against this ruling and I therefore say no more about it.

1. The Judge then turned to the question of whether there was a contract between the parties. In deciding that there was not, his reasoning was essentially as follows.

**Was there a contract**

1. In relation to whether there was an express contract between the parties, the Employment Judge dealt only briefly with this at paragraph 168. Having found that there was no written contract between the Claimant and either of the Respondents, his reasons for concluding that there was no express contract were these:

(i) Although there was an offer of appointment, which the Claimant accepted, "… the appointment did not take effect as a matter of law until due ceremony was observed, so any contract did not depend upon the will of the parties alone."

(ii) The offer of appointment was made by Mrs Miles and, although she was party to an agreement that the Claimant be appointed as rector at Teme Valley South, it did not follow that she entered into a contract governing the terms and conditions on which the Claimant was to undertake his duties there.

(iii) Mrs Miles did not make that offer on behalf of the DBF, which had no part to play in the appointment process. Further, the offer could not have been made by Mrs Miles as agent on behalf of the Bishop. She had the right of presentation of the rector and the right of veto and she could not have been the Bishop's agent if she had the right to refuse his choice. She was therefore "… acting as her own principal in exercise of the right given to her by ecclesiastical law to appoint to an office … and an intention to create legal relations about terms and conditions on which the office should be performed really cannot be attributed to her."

1. Mr Bowers emphasises that the Claimant's primary submission below was that there was an express contract between the Claimant and the Bishop. This contract was agreed orally and by conduct and incorporated the Bishop's Papers, in just the same way as many employment contracts are entered into on a daily basis. He points out that the Bishop was being sued in his corporate, and not his personal capacity, as the effective representative of the Diocese, which is in turn representative of the wider Church.

1. I shall return to the Claimant's grounds of appeal later on, but I mention this point now because, save for what appears at paragraph 168, the Employment Judge concentrated thereafter primarily on the question of whether a contract was to be implied from the parties' dealings, on the basis of necessity.

1. On that issue his conclusions were essentially these.

1. The terms and conditions of service in the Claimant's office were well known and were not the subject of any negotiation, discussion or agreement.

1. The effect of the decision of the House of Lords in Percy v Church of Scotland Board of National Mission [2006] 2 AC 28(HL) was "… simply the removal of one barrier that hitherto existed in the path of a minister seeking to establish that he had entered into a contractual relationship." Ministers of religion are in no special position, better or worse, because of the spiritual nature of their duties. There is therefore no presumption against an intention to create legal relations, as the Court of Appeal had decided in Coker v Diocese of Southwark and Others [1998] ICR 140. However, a minister must still establish that there is, "… a consensual, contractual element in the relationship with his Church represented, in Mr Sharpe's case, by the respondents he has joined to his claim."

1. The Claimant's receipt of a remuneration package was not determinative.

1. Agreement about something more than the discharge of the office was required. Some office holders (for example judges and police officers) served by reason of their office only and not by reason of any contract, whether a contract of service or for services. The relevant appellate authorities all recognised that individual cases depended on their own facts.

1. In the Claimant's case there were none of the necessary elements of (a) service, (b) undertaking to perform work personally, or (c) the identification of contracting parties.

1. In the cases of Percy, New Testament Church of God v Stewart [2007] IRLR 178 and Moore/Preston v President of the Methodist Conference [2012] ICR 432 CA, the courts had focussed, in each case, on the special facts before them in concluding that there was a contract in addition to the minister's office. (The Supreme Court has since restored the Employment Tribunal's decision in Moore/Preston that there was no contract on the facts of that case).

1. The judge identified a number of differences between the facts of those cases and those of the present claim, which he regarded as material, as follows:

(1) In each of those cases the claimants' relationships with their churches depended on negotiated terms. In the present case:

"… save for the remuneration package, Mr Sharpe's relationship was defined by ecclesiastical law or, like hours of work and holidays, left, non-contractually, to Mr Sharpe's discretion with guidelines only as to its exercise."

(2) The stipend was "not a freely negotiated sum that played any part in the interview and appointment process. It was something Mr Sharpe accepted went with his office."

(3) The Bishop's Papers could not be said to be incorporated into a contract. They were not within the contemplation of the parties at the time and did not pass the "officious bystander" test. They mostly covered spiritual matters that were not sufficiently certain to be contractually binding. The terms of service section was only one of seven sections. Substantial parts of that section lacked contractual precision and amounted to guidelines only. It was not correct to describe this "series of ad hoc policy documents" as an employee's handbook. The Bishop's Papers could not be regarded as contractual documents.

(4) In each of the other three cases referred to above, the terms that bound the parties were "the creature of the church concerned rather than the law." Those terms and conditions were clearly intended to govern the parties' relationship. Ms Percy's post, for example, had no content other than that given to it by the terms and conditions agreed ad hoc between the parties. That was not the case with this Claimant. All the principal terms concerning this Claimant's duties, responsibilities and relationships with others in the Church, including matters of discipline and the machinery for termination of his office, were defined by ecclesiastical law.

(5) The Employment Judge stated that:

"… in a broad sense Mr Sharpe did have a legal relationship with the Church, but it was of a kind imposed by the law itself, by reason of and consequent upon his appointment to office and not by reference to any intentions on his part or on the part of anyone on behalf of the Church. They had no ability to detract from the terms on which they were bound. Although they had a freedom to contract over and above those terms, Mr Sharpe confirmed to me himself that that did not happen expressly."

There was consequently no need for the implication of a contract between the parties. This was not a case where the intention to create legal relations or the lack of such an intention was paramount. There was simply no agreement, freely negotiated, between two parties. In any event there was nothing which would require him to suppose that the parties had any intention to create legal relations.

(6) The lack of a statutory remuneration package defined by law did not alter that analysis and require the implication of a contract. The payment of money for the discharge of an office did not automatically imply a contract between the parties. The remuneration package in this case was an important part of the relationship between the Claimant and the Church, but it was by no means the whole of the relationship that could alone make up a contract.

(7) In each of the other three cases there was a readily identifiable person or body with whom the contract was made. The absence of such a person or body in this case was found to be an "insurmountable barrier" to the Claimant's claim, even if he were wrong in his other conclusions.

(8) There was no legal relationship between the Claimant and the DBF, which acted merely "as a conduit for the money by which his stipend is paid". Their statutory right unilaterally to reduce the stipend due to lack of funds was also a contrary indication to the parties' relationship being governed by contract although "the apparent lack of a legal remedy if the stipend was not paid was not something that is attractive to the modern employment lawyer".

(9) In relation to the Bishop the Employment Judge held as follows at paragraph 178,

"I do not find there could be a contractual relationship between Mr Sharpe and the Bishop. The power to pay a stipend is a statutory one and it lies with the DBF. The Bishop has undertaken no obligation to pay it and does not have control of the necessary funds to make good any such obligation. Whilst he may have some limited powers to instruct or supervise Mr Sharpe … they are not extensive and again, they are defined by law. They do not arise from any consensual arrangement. They are mostly exercisable by the Bishop in the course of his own statutory duties to ensure the proper use of churches and the holding of services. The Bishop cannot instigate disciplinary procedures, which are statutory and concerned primarily with the minister's conduct as a minister rather than specific to his appointment at Teme Valley South."

(10) The Claimant's submission that either or both of the Respondents could be held to be the other party to the contract, and the Claimant's employer, amounted to "casting around for a convenient peg" on which to hang the suggested contract. Within the complex, statutory structure of the Church it was not possible to imply any relationship between a freehold rector and any identifiable person or body, which could be said to be consensual and contractual. The Claimant had failed to demonstrate that such a relationship existed with either of the Respondents.

1. For the assistance of the parties the Employment Judge went on to consider, assuming a contrary finding that the parties had entered into a contractual relationship, whether he would have found it to be a contract of employment. For three main reasons he answered that question in the negative.

1. First, there was a lack of supervision and control. The Claimant served the DBF and the Bishop only in the general sense that he assisted the Church in the furtherance of its mission. But he provided no direct service to either Respondent in the sense of work done for them at their behest and under their control. It was the Claimant's office that defined what he had to do. No-one supervised his performance in any meaningful way. He was free to perform his office at the dictate of his own discretion and conscience.

1. The Claimant had no "master" in the Ready Mixed Concrete sense and he accepted that during his tenure the Bishop had not issued any instructions to him. Such authority as the Bishop had was a persuasive one, derived from respect for his position. The relationship was too loose to show a contract of service. The Claimant's situation went beyond that of Ms Percy, who was subject to contractual, disciplinary procedures. The powers of removal from office in the Claimant's case were not contractual. There was no right of summary dismissal, and no right to determine the post on notice. The Claimant could not "unilaterally resign", resignation requiring three months' notice to the Bishop in a prescribed form. Further, neither Respondent could commence disciplinary proceedings, and any sanction ultimately imposed by the Bishop could only have been with the Claimant's consent.

1. Secondly, the degree of power the Claimant had to delegate meant that he could not be said to have entered into a contract of personal service.

1. Thirdly, while the label placed by the parties on their relationship was not determinative, there was ample evidence that it had traditionally been recognised practice that rectors in the Church of England are not employees; and in this case label and reality coincided. Professor McClean made it clear in his evidence that both clergy and hierarchy wanted the status quo to remain.

**Was the Claimant a "worker" within s.43K(1)(a) Employment Rights Act 1996?**

1. S. 43K(1) provides as follows:

"For the purposes of this Part 'worker' includes an individual who is not a worker as defined by section 230(3) but who:

(a) works or worked for a person in circumstances in which -

(i) he is or was introduced or supplied to do that work by a third person, and

(ii) the terms on which he is or was engaged to do the work are or were in practice substantially determined not by him but by the person for whom he works or worked, by the third person or by both of them,

(b) contracts or contracted with a person, for the purposes of that person's business, for the execution of work to be done in a place not under the control or management of that person and would fall within section 230(3)(b) if for 'personally' in that provision there were substituted '(whether personally or otherwise)',"

1. Leaving aside the Claimant's submission, that the extended definition of "worker" in that section did not require him to show that he had a contract, the Employment Judge found that there were two, further factual bases upon which the Claimant's case failed.

1. First, the Claimant was not "introduced or supplied" to do his work by a third person. Since the Claimant's argument was that he worked for the Bishop, the Bishop could not be that third person. It is necessary to look at the Claimant's duties as rector in the round and the reality was that, in answering the advertisement and successfully applying for the appointment, the Claimant had introduced himself to whomever he could be said to work for.

1. Secondly, even if the terms and conditions of the Claimant's office were incorporated into a contract of employment, it could not be said that the terms and conditions were "substantially determined" by either of the Respondents or by some hypothetical, third party introducer/supplier.

1. The attempt to introduce a third party into the equation was an attempt to circumvent the requirement for a contract by relying upon the omission of that word from any part of ss(1)(a), but even if the Claimant's submissions as to a third party were right, that could not assist him. The judge said:

"I find that the words in ss(1)(a)(ii), 'the terms on which he is engaged to do the work' envisage terms that are capable of legal enforcement and imply the existence of a contract. It is common ground that the purpose of introducing the subsection was to protect agency or contract workers. That does not mean that if the words cover other workers they will not be entitled to protection, but it is difficult to think, for example, that Parliament meant to protect people who work on voluntary or expense only terms. It would be a significant departure from existing law to enact a definition of a worker that was to apply in the absence of a contract between the worker and someone. That is outside the normal remit of 'employment' legislation. I am persuaded that if that was Parliament's intention then it would have been spelt out more clearly than it has been and certainly not by leaving a contrary implication in the words I have referred to. In my judgment, to qualify under s.43K(1)(a) a worker must have a contract with at least one of either the supplier/introducer or the end user of his services."

1. In relation to s.43K(1)(b), and whether the Claimant came within the more general definition of "worker" contained in s.230 of the 1996 Act, the Claimant had to show that he had contracted to provide his services personally. An unfettered right to delegate is inconsistent with personal service, but the occasional ability to delegate is not.

1. Subsection 1(b), however, calls for a contractual relationship. The Judge said that if he had found there to be a contract between the Claimant and either Respondent, the requirement that it should be "for the purposes of that person's business" would not have been a barrier for the Claimant, that phrase embracing, in his judgment, the parties' activities in the cure of souls. Further, the place in which the Claimant's work was to be performed was clearly the Benefice of Teme Valley South. Given his findings as to the Bishop's lack of control and supervision over him and the Claimant's general autonomy, Teme Valley South was not "within the control or management" of any person with whom the Claimant might have contracted. Thus, if the Claimant had entered into a contract, the Judge would have found him to be a 'worker' within this definition and qualified to pursue his public interest disclosure claims.

1. Once again, for the assistance of the parties, the Employment Judge went on to consider the position, assuming that s.43K(b) did not apply, and the question whether he would have regarded the contract to be for the provision of services personally by the Claimant, thereby qualifying him under s.230 of the Act. That section provides, so far as relevant,

"s.230(3) In this Act "worker"…..means an individual who has entered into or works under (or, where the employment has ceased, worked under)

(a) a contract of employment, or

(b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual;

and any reference to a worker's contract shall be construed accordingly."

1. The Judge decided that the Claimant had an unfettered right to delegate the functions of his office to a suitably qualified person. It was irrelevant that he did not exercise that right. Applying the relevant authorities, the Claimant did not undertake always to perform his office personally.

**The Claimant's appeal**

The law: contract of employment

1. I was referred to extensive authority in the course of argument, in particular on the development of the law relating to "religious workers". However, following the Supreme Court's recent decision in The President of the Methodist Conference v Preston [2013] UKSC 29, it is now unnecessary to refer to all the earlier cases. The Claimant's first ground of appeal is that the Employment Judge failed to apply binding authority when determining whether there was a contract between the parties. That must now be considered in light of the decisions of the House of Lords in Percy and of the Supreme Court in Preston, the Employment Judge not having the benefit of this latter decision when he was considering the law.

1. The decision to stay this appeal, pending the decision in Preston, has proved a wise one. The law in this area has now been clarified. The question is what effect the decision has on this case. Mr Tattersall submits that the decision in Preston strikes at the heart of the Claimant's case on appeal, and that it vindicates the approach, findings and conclusions of the Employment Judge. Mr Bowers contends that the Claimant's first ground of appeal must now succeed, because it is plain that the Employment Judge applied the wrong test and approached the issue in the wrong way. It is therefore necessary to set out what I now consider to be the legal principles to be applied in determining whether the relationship between these parties was contractual and, if so, whether the Claimant was working under a contract of employment.

1. Before the decision of the House of Lords in Percy the key authorities were the Court of Appeal decisions in President of the Methodist Conference v Parfitt [1984] QB 368 and then in Diocese of Southwark v Coker [1998] ICR 140.

1. In summary, the case of Parfitt, involved an unfair dismissal claim brought by a Methodist minister. Finding that there was no contract of service, the Court held that it was impossible to conclude that any contract existed between a newly ordained minister and the Methodist Church, when the minister was received into "full connexion".

1. In Coker the question was whether a priest in the Church of England was, whilst working as an assistant curate, an "employee" within the Employment Protection (Consolidation) Act 1978 (now the Employment Rights Act 1996), thereby having the right not to be unfairly dismissed by the respondent. The Court of Appeal held that the duties of a minister of religion were, in general, inconsistent with an intention to create contractual relations. There was therefore no kind of contract at all between an assistant curate and a putative employer. The assumption that there was a contractually enforceable agreement, in the absence of evidence to the contrary, applied in the case of ordinary commercial transactions, but had no place in the relationship between a church and a minister of religion.

1. In Percy v Church of Scotland, where the appellant, Helen Percy, was an ordained minister in the Church of Scotland, the main question for the House of Lords was whether Ms Percy's relationship with the Church constituted "employment" as defined in s.82(1) Sex Discrimination Act 1975. In that case Ms Percy did not contend that she entered into a contract of service. Her claim was that she was employed under a contract for services, in that she agreed personally to execute certain work.

1. On the facts, the majority decision was that the agreement between Ms Percy and the respondent displayed an intention to create legal obligations between the parties, enforceable in the event of a breach; and that the terms and conditions of her appointment, and the services she was required to provide in return for her salary and other benefits, constituted a contract personally to execute work within the definition of "employment" in s.82(1).

1. For the purposes of the present appeal, the following passages in the judgments are of particular importance.

1. After referring to the earlier authorities, and detecting "several different strands" in the reasoning deployed, Lord Nicholls, giving the lead judgment of the majority, first addressed the position of office holders and employees. The contrast referred to, between appointment to an office and entering into a contract of employment, was capable of misleading and needed to be handled with care. The question in the case before them was not whether Ms Percy held an office, but whether she had entered into a contract under which she agreed to provide defined services. Holding an office, even an ecclesiastical office, and the existence of a contract to provide services were not necessarily mutually exclusive.

1. Sometimes the existence of an office is clear. A benefice in the Church of England, he pointed out, is regarded as a freehold office belonging to the incumbent for the time being. An office may also be created by statute, with attendant statutory functions, such as a superintendent registrar of births, deaths and marriages.

1. However, holding an office and being an employee are not inconsistent. At paragraph 20 Lord Nicholls said this:

"A person may hold an 'office' on the terms of, and pursuant to, a contract of employment. Or, like a director of a company, a person may hold an office and concurrently have a service contract. Whether there is a contract in a particular case, and if so what is its nature and what are its terms, depends upon an application of familiar general principles. That the appointment in question is or may be described as an 'office' is a matter to be taken into account. The weight of this feature will depend upon all the circumstances. But this feature does not of itself pre-empt the answer to the question whether the holder of the 'office' is an employee. This feature does not necessarily preclude the existence of a parallel contract for carrying out the duties of the office even where they are statutory: see Lord Oliver of Aylmerton in Miles v Wakefield Metropolitan District Council [1987] AC 539, 566-567."

1. Such an approach was noted to be sound in principle and to have been adopted in practice in a number of reported decisions, including cases involving ministers of religion.

1. In relation to the intention to create legal relations, Lord Nicholls said as follows at paragraphs 23-26:

"23 A further strand in the authorities, most notably in the judgment of Mummery LJ in Diocese of Southwark v Coker [1998] ICR 140, concerns the absence of an intention to create legal relations. 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 in President of the Methodist Conference v Parfitt [1984] QB 368, are a good example of this. The nature of the lifelong relationship between the Methodist Church and a minister, the fact that he could not unilaterally resign from the ministry, the nature of his stipend, and so forth, all these matters made it impossible to suppose that any legally-binding contract came into being between a newly-ordained minister and the Methodist Church when he was received into full connection. Similarly with the Church's book of rules relied on by the Reverend Colin Davies in Davies v Presbyterian Church of Wales [1986] 1 WLR 323. Then the rebuttable presumption enunciated by the Lord President in the present case, following Mummery LJ's statements of principle in Diocese of Southwark v Coker [1998] ICR 140, 147, 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.

24 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-binding 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.

25 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 [1984] QB 368, 376, 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 your Lordships' House in Davies v Presbyterian Church of Wales [1986] 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.

26 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."

1. Addressing the question of the parties to the contract, he said this:

"27 The final point calling for comment is the need to identify the parties to any alleged contract of service or for services. It goes without saying that before a tribunal can find that a contract of this nature was concluded it must be able to identify the employer with whom the claimant made the contract. As can be seen from the above summary of the authorities, this can be a source of real difficulty with a nationwide church whose complex affairs are conducted through a multiplicity of boards and committees. There may be one body responsible for finance, allocating precious resources between competing demands, all of which are eminently worthy. There may be another body responsible for making payments. There may be a third body charged with selecting the candidate best suited to this or that appointment, a yet further body may formally make the appointment, and have power of dismissal; and so on.

28 These different bodies are, in a broad but real sense, all part of 'the Church' in question. But the 'Church' may not be an entity capable of making a contract or of suing or being sued. This is so with the Church of England. It is equally so with a diocese of the Anglican Church, for the reason given in Diocese of Southwark v Coker [19981 ICR 140, 148. This is also true of the Church of Scotland. Then the fragmentation of functions within such an 'umbrella' organisation may make it difficult to pin the role of employer on any particular board or committee. But this internal fragmentation ought not to stand in the way of otherwise well-founded claims."

1. Lord Nicholls then turned to the particular facts of the case. Since counsel for both sides in the present appeal sought to rely upon various aspects of them, I set them out here, together with the conclusions.

"31 Ms Percy responded to the advertisement. She was interviewed and her application was successful. The General Secretary of the Board of National Mission, the Reverend Douglas Nicol, invited her to accept the appointment. He sent her a copy of the terms and conditions. These were an amplified form of the terms and conditions already mentioned. They included a term that the associate minister, like any other minister, would be responsible to the presbytery in matters affecting life, doctrine and discipline. Ms Percy wrote to Mr Nicol formally accepting the offer. The presbytery ratified the appointment. In due course she was introduced as associate minister at a service at Kilry Church.

32 Subsequently, when the unhappy events leading to Ms Percy's demission occurred, she initially offered her resignation and then changed her mind and asked to withdraw her resignation. On 1 July 1997 Mr Nicol wrote in response, on behalf of the National Board of Mission, to 'your request to withdraw your letter of resignation from employment by the Department of National Mission'. He said that 'we', meaning the Board, agreed 'to reinstate your employment' from 17 June. He added that until further notice 'you are suspended on full pay'. Subsequently the suspension was confirmed by the presbytery.

33 These documents on their face seem to me to show that Ms Percy entered into a contract with the Board to provide services to the Church on the agreed terms and conditions. The House has been shown and told nothing to displace this prima facie impression. Whether the contract was a contract of service or only a contract for services is not material in this case.

34 The fact that Ms Percy's status as an associate minister might readily be described as an ecclesiastical office leads nowhere. The post to which she was appointed had no content other than that given by the terms and conditions agreed ad hoc between the parties. Her rights and duties were defined by her contract, not by the 'office' to which she was appointed.

35 Likewise, the fact that, as it seems, power of dismissal rested with the presbytery and not with the Board of National Mission also leads nowhere in this case. Ms Percy's contract with the Board expressly provided for the supervisory and disciplinary role of the presbytery. That was one of the terms of the contract. This allocation of supervisory and disciplinary responsibility to the presbytery in accordance with the constitutional structure of the Church does not of itself preclude the Board from being Ms Percy's employer."

1. Lord Hope, after carrying out his own analysis of the facts of the case, agreed with Lord Nicholls (see paragraphs 112-115), that the agreement between the parties came within the scope of the protection afforded by the 1975 Act to those whose work is in the field of employment.

1. In a short judgment, Lord Scott, agreeing that Ms Percy's appeal should be allowed for the reasons given by Lord Nicholls, Lord Hope and Baroness Hale, stated expressly that the agreement between the parties was an agreement which created legal obligations between them. The fact that Ms Percy's duties were the duties of an office made no difference whatsoever.

1. Baroness Hale, agreeing with Lord Nicholls, considered that Ms Percy was not a person whose terms and conditions were defined by the office she held, rather than by any contract. She stated as follows at paragraphs 148 and 151:

"… Her rights and duties were defined by the terms she had agreed with the Parish Reappraisal Committee of the Board of National Mission. As Lord Nicholls and Lord Hope have demonstrated, these bore all the hallmarks of a contract. For the reasons they have given, I too find it impossible to conclude that there was no intent to enter into legal relations. With the greatest respect to the Court of Appeal in Diocese of Southwark v Coker [1998], ICR 140 and to the Lord President in this case, I have difficulty in understanding why there should be any presumption against such an intention. Staughton LJ accepted in Croker, at p 150, that there might be a 'subsidiary contract, as to a pension, or the occupation of a house'. Miss 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. As the Perceval-Price case [2000] IRLR 380 demonstrates, the fact that she had considerable discretion and independence in the way in which she carried out those duties did not mean that she was not a 'worker' or a person who had contracted 'personally to execute work or labour'. That was exactly what she was.

…

151 We were taken to three cases where clergymen had complained of unfair dismissal: President of the Methodist Conference v Parfitt [1984] QB 368, Davies v Presbyterian Church of Wales [1986] 1 WLR 323 and Diocese of Southwark v Coker [1998] ICR 140. The definition of 'employee' for the purposes of the law of unfair dismissal is different from, and narrower than, the definition of 'employment' in the Sex Discrimination Act 1975. It is confined to 'an individual who has entered into or works under... a contract of employment'; and a 'contract of employment' means 'a contract of service or apprenticeship': see Employment Rights Act 1996, section 230(l) and (2). That in itself is sufficient to distinguish those authorities. In any event, all of these cases depend upon their own particular facts. 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."

1. For the purposes of this appeal, the following points emerge clearly from the judgment in Percy.

1. First, as Baroness Hale emphasised at paragraph 151, all of these cases depend on their own particular facts. That was common ground in this appeal and it has recently been re-emphasised by the Supreme Court in Preston. Mr Tattersall submitted that there must always be a careful analysis of the particular facts of each individual case, and that such an analysis should be carried out on a "church by church basis", because there may well be different outcomes as between different churches.

1. Secondly, while the cases of Parfitt and Coker were not expressly overruled, I accept Mr Bowers' submission that the House of Lords sounded the death knell for the notion that there was a difference in principle between the spiritual and the secular when considering employment arrangements between a church and its serving ministers in the modern age. There is no longer any presumption that a minister and a church do not intend to enter into legal relations. 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 minister's duties are of a religious nature. The precise nature of the legal relationship will depend on the facts.

1. In Preston, the Court of Appeal, approving Underhill J's analysis of Percy in the Employment Appeal Tribunal, considered that the notion of a rebuttable presumption that, viewed objectively, there was an absence of an intention to create legal relations, had now been abandoned. The spiritual role of a minister, while still a relevant factor to be taken into account, could not in itself justify denying contractual effect to an arrangement which otherwise had all the necessary indicia of a contract. Maurice Kay LJ, giving the judgment of the Court, made this observation at paragraph 25:

"25 It seems to me that, although most of the speeches in Percy's case are characterised by a linguistic gentleness in their approach to Parfitt, that does not disguise the fact that they caused the tectonic plates to move. As Arden LJ said in New Testament Church of God v Stewart [2008] ICR 282, para 64, Percy's case is an example of the courts 'fulfilling their time-honoured role of updating the common law and making it more suitable for modern circumstances'."

**The Decision of the Supreme Court in Preston**

1. The Supreme Court, by majority, allowed the President's appeal and restored the judgment of the Employment Tribunal, that Mrs Preston was not an employee for the purposes of an unfair dismissal claim. Lord Sumption, giving the lead judgment of the majority, considered that the EAT and the Court of Appeal had paid insufficient attention to the constitution (the Deed of Union) and the standing orders, which were the foundation of Mrs Preston's relationship with the Methodist Church.

1. In his analysis of the legal principles, Lord Sumption noted that much of the earlier body of authority on the point was "influenced by relatively inflexible tests borne of social instincts which came more readily to judges of an earlier generation than they do in the more secular and regulated context of today."

1. He found two recurrent themes present in the case law. The first was the distinction between an office and an employment. In that respect a beneficed clergyman of the Church of England was, until recent Measures modified the position, described as the paradigm case of a religious office holder.

1. The second theme was the tendency to regard the spiritual nature of a minister of religion's calling as making it unnecessary and inappropriate to characterise the relationship with the Church as giving rise to legal relationships at all.

1. Percy was acknowledged to be the leading modern case. After referring to the judgments of the majority, Lord Sumption said this at paragraph 10:

"10. It is clear from the judgments of the majority in Percy that the question whether a minister of religion serves under a contract of employment can no longer be answered simply by classifying the minister's occupation by type: office or employment, spiritual or secular. Nor, in the generality of cases, can it be answered by reference to any presumption against the contractual character of the service of ministers of religion generally: see, in particular, Baroness Hale at para 151. The primary considerations are the manner in which the minister was engaged, and the character of the rules or terms governing his or her service. But, as with all exercises in contractual construction, these documents and any other admissible evidence on the parties' intentions fall to be construed against their factual background. Part of that background is the fundamentally spiritual purpose of the functions of a minister of religion."

1. On the facts of Preston, insufficient attention was paid by the EAT and the Court of Appeal to the particular features of the Methodist Church, namely the Deed of Union agreed in 1932 and the standing orders made by the Conference, the governing body of the Church. These documents formed the basis of Ms Preston's relationship with the Methodist Church. If the arrangements governing the Ministry described in the Deed of Union and the standing orders were a contract between the minister in that capacity and the Methodist Church then, said Lord Sumption, it was inevitable that they were to be classified as a contract of employment.

1. For a number of reasons, however, the rights and duties of ministers in the Methodist Church were found to arise entirely from their status in the constitution of the Church, and not from any contract. Lord Sumption's reasons were as follows:

(1) The manner in which a minister is engaged. Neither admission to full connexion nor ordination are themselves contracts, and "stationing" is a critical part of the management of the Church. Thereafter the minister's duties are not consensual, but depend entirely on the unilateral decisions of the Conference.

(2) The stipend and the manse are due only by virtue of the minister's admission into full connexion and ordination; and they continue even in the event of sickness or injury.

(3) The disciplinary scheme of the Deed of Union and standing orders is the same for all members of the Church, whether ministers or ordinary lay members.

(4) The relationship between the minister and the Church is not terminable except by the decision of the Conference or its Stationing Committee or a Disciplinary Committee. There is no unilateral right to resign, even on notice.

1. On the basis of the Deed of Union and standing orders, Lord Sumption concluded that "the ministry described in these instruments is a vocation, by which candidates submit themselves to the discipline of the Church for life. Unless some special arrangement is made with a particular minister, the rights and duties of ministers arise, as it seems to me, entirely from their status in the constitution of the Church and not from any contract."

1. Counsel for Ms Preston had relied on the exchange of correspondence and the particular circumstances in which Ms Preston came to be stationed at the Redruth Methodist Circuit. This, he submitted, revealed a contractual arrangement analogous to the one entered into by Ms Percy. The correspondence referred to the "offer" of a "position" at the Circuit for a period of five years and Ms Preston confirmed her acceptance of that offer.

1. The majority of the Supreme Court rejected this submission on the basis that the exchange of correspondence occurred within the framework of the standing orders and was therefore only part of a much longer procedure.

1. Lord Sumption accepted that "… in other contexts, an exchange of letters like this one might well have given rise to a contract." In the particular context of that case, however,

"… Ms Preston was serving as a minister at Redruth not pursuant to the five-year relationship envisaged in the exchange of letters, but pursuant to the life-long relationship into which she had already entered two years before the exchange of letters, when she was ordained. The nature of that relationship was wholly dependent on the Deed of Union and standing orders under which she took that step. It makes no difference to this analysis that Ms Preston was appointed as a Superintendant Minister at Redruth. That was simply the role for which she was stationed by the Conference."

1. Returning to the case of Percy and the approach to be adopted in such cases Lord Sumption said as follows at paragraph 26:

"… The question whether an arrangement is a legally binding contract depends on the intentions of the parties. The mere fact that the arrangement includes the payment of a stipend, the provision of accommodation and recognised duties to be performed by the minister, does not without more resolve the issue. The question is whether the parties intended these benefits and burdens of the ministry to be the subject of a legally binding agreement between them. The decision in Percy is authority for the proposition that the spiritual character of the ministry did not give rise to a presumption against the contractual intention. But the majority did not suggest that the spiritual character of the ministry was irrelevant. It was a significant part of the background against which the overt arrangements governing the service of ministers must be interpreted. Nor did they suggest that the only material which might be relevant for deciding whether the arrangements were contractual were the statements marking the minister's engagement, although it so happened that there was no other significant material in Ms Percy's case. Part of the vice of the earlier authorities was that many of them proceeded by way of abstract categorisation of ministers of religion generally. The correct approach is to examine the rules and practices of the particular church and any special arrangements made with the particular minister. What Lord Nicholls was saying was that the arrangements, properly examined, might well prove to be inconsistent with contractual intention, even though there was no presumption to that effect. He cited the arrangements governing the service of Methodist ministers considered in Parfitt as an example of this … These were, essentially, the lifelong commitment of the minister, the exclusion of any right of unilateral resignation and the characterisation of the stipend as maintenance and support. There is nothing inconsistent between his view on these points and the more general statements of principle appearing in his speech and in the speeches of those who agreed with him."

1. Significantly, Lord Sumption rejected a submission by the President of the Methodist Church that, in the absence of anything in the Deed of Union or the standing orders amounting to an express contract of employment, the test for deciding whether there was an implied contract of employment was one of 'business necessity'. He did so for three reasons:

"… In the first place, in modern conditions, against the background of the broad schemes of statutory protection of employees, it would not readily be assumed that those who are engaged to perform work and receive remuneration intend to forgo the benefits of that protection, even where the work is of spiritual character. Secondly, as Lord Hope pointed out in Percy, at para 107, the practical effect of the suggested approach is to reintroduce the presumption of non-contractual status in the case of minister of religion, which he, along with the majority in that case rejected in principle. Third, whatever the legal classification of a Methodist minister's relationship with his Church, it is not sensible to regard it as implied. It is documented in great detail in the Deed of Union and the standing orders. The question is whether the incidents of the relationship described in those documents, properly analysed, are characteristic of a contract and, if so, whether it is a contract of employment. Necessity does not come into it."

1. Following the decisions in both Percy and Preston, it is now abundantly clear that cases concerning the employment status of a minister of religion cannot be determined simply by asking whether the minister is an office holder or is in employment. As the Employment Judge recognised in this case, an individual appointed to work in a particular post may be both the holder of an office and an employee working under a contract of service. Whether there is payment of a salary, whether it is fixed, and whether the worker's duties are subject to the control of the employer are important matters to be considered in determining this issue. In addition, in this respect, "…an inclusive and purposive approach should be adopted in relation to employee protection" (per the EAT in Johnson v Ryan and Others .

1. Further, there is no presumption against ordained ministers being engaged under contracts. The spiritual nature of the minister's duties does not prevent a contract of employment arising, though it remains the context in which the question whether the arrangement is one of contract is to be determined.

1. Each case must always be determined on its own particular facts, having regard primarily to the manner in which the minister was engaged, and to the particular rules and practices of the Church which govern his or her service.

1. The relevant documentation and other admissible evidence relevant to the intentions of the parties, as at the time when the agreement between them was concluded, therefore falls to be construed objectively against the specific factual background, which will include the spiritual purpose of the minister's functions.

1. This reflects what was common ground before me, that the analysis to be carried out in each case will always be fact specific, and probably Church specific. The Employment Judge also referred to the possibility of different rules for different Churches (see paragraphs 172 and 173 of his judgment).

1. In determining whether, if there is a contract, it is a contract of service, rather than a contract for services, the classic tests remain those established in Ready Mixed Concrete v MoPNI [1968] 2 QB 497. What is required for the former is that the servant agrees to provide his own work and skill in performing some service; that he agrees expressly or impliedly that, in performance of that service, he will be subject to the other's control to a sufficient degree to make the other master; and that the other provisions of the contract are consistent with it being a contract of service. It is important that all the facts relating to the relationship are considered, so that there is an informed and considered assessment of the relationship as a whole.

1. In respect of the element of control, however, it has long been recognised that the control test is of considerably less importance in the case of those engaged in the professions, or whose work requires particular skill or expertise, (See, for example, Cassidy v Ministry of Health [1951] 1 All ER 574 CA, and Beloff v Pressdram Limited [1973] FSR 33 ChD, in which a resident surgeon and a journalist, respectively, were held to be employees). In Beloff, Ungoed-Thomas J held that control is just one of many factors, whose influence varies according to the circumstances. In such highly skilled work as that of a journalist, "….it seems of no substantial significance."

1. In the context of ministers of religion, Baroness Hale said this in Percy, at paragraph 146,

"The fact that the worker has very considerable freedom and independence in how she performs the duties of her office does not take her outside the definition. Judges are servants of the law, in the sense that the law governs all that they do and decide, just as clergy are servants of God, in the sense that God's word, as interpreted in the doctrines of their faith, governs all that they practise, preach and teach. This does not mean that they cannot be "workers" or in the "employment" of those who decide how their ministry should be put to the service of the Church."

1. More recently, in The Catholic Child Welfare Society and Others v The Institute of the Brothers of the Christian Schools and Others [2012] UKSC 56, (CCWS) the Supreme Court considered the element of control in the context of personal injury claims for sexual abuse. The Court was not therefore concerned directly with employment status. The issue was whether the relationship between the individual Brothers, who taught at a residential school for boys in need of care, and the Institute, was such as to give rise to vicarious liability on the part of the Institute for acts of abuse committed in the school. The Institute contended that their relationship with the Brothers lacked the elements of management and control required for such liability.

1. On the facts of that case, the Court's conclusion was that the relationship between the Brothers and the Institute was sufficiently akin, if not closer, to that of employer and employee to satisfy the first stage of the test for vicarious liability. The importance of the decision, in the present case, lies in what was said about the significance of control. Lord Phillips, giving the judgment of the Court, said this at paragraph 36:

"36. In days gone by, when the relationship of employer and employee was correctly portrayed by the phrase 'master and servant', the employer was often entitled to direct not merely what the employee should do but the manner in which he should do it. Indeed, this right was taken as the test for differentiating between a contract of employment and a contract for the services of an independent contractor. Today, it is not realistic to look for a right to direct how an employee should perform his duties as a necessary element in the relationship between employer and employee. Many employees apply a skill or expertise that is not susceptible to direction by anyone else in the company that employs them. Thus the significance of control today is that the employer can direct what the employee does, not how he does it."

1. The Supreme Court also approved the approach adopted by the Court of Appeal in JGE v The Trustees of the Portsmouth Roman Catholic Diocesan Trust [2012] EWCA Civ 938 CA, another case involving vicarious liability for sexual abuse. At paragraph 75, Ward LJ said as follows in relation to the element of control :

"Although the priest decides for himself how he runs his parish he operates within a pre-existing framework of rights and obligations set out in the Code of Canon Law as all such matters as duties, financial support and time away from the parish are left to the general provisions of Canon Law. Nevertheless he is ultimately subject to the sanctions and control of his bishop. The bishop does not control each and every facet of how the priest is to carry out his duties day by day for, as Monsignor Read explained in his written report,

'His [the bishop's] role is not one of giving directions as to how that office is to be carried out. Those requirements are set out in the universal and particular canon law applying to the office concerned.'

Nevertheless residual control still vests in the bishop. Ultimately there is little difference between the bishop's control over the priest and the health trust's control over the surgeon: neither is told how to do the job but both can be told how not to do it."

1. As this passage makes clear, in considering the element of control, it is the existence of mutual obligations of the parties that is important. I accept Mr Bowers' submission that what matters is whether there is "residual control", rather than the frequency, or infrequency, with which that control may be exercised in practice. The question in this case is therefore not how often the Bishop used the powers he had, but whether there were powers available to him to use.

**Percy and Preston: factual differences with the present case**

1. The starting point, as Mr Bowers correctly submits, is that Preston, like Parfitt, involved a non-established church with markedly different doctrines, and with a non-statutory background, to which canon law does not apply. Mr Tattersall places considerable reliance on the fact that the decision of the Employment Tribunal in Preston was restored and submits that both the reasoning and the decision in that judgment are fatal to the contentions being advanced by this Claimant on appeal. I cannot accept that submission. The actual decision of the majority on the facts seems to me to be of little assistance in the present case. In addition, the Supreme Court was not concerned with the question whether Ms Preston was a 'worker', within the meaning of the Employment Rights Act.

1. As the findings of the Employment Judge set out above make clear, there are a number of important differences between the rules and practices of the Methodist Church and those of the Church of England.

1. There is, first, nothing in the Church of England that appears comparable with the process of full connexion and "stationing" in the Methodist Church, as described by the Supreme Court.

1. As explained in Preston, the Methodist Church adheres to the doctrine of the priesthood of all believers. There is no Bishop and there is nothing comparable with the Bishop's Papers. In order to become a minister of the Methodist Church a candidate must first obtain the judgment of the Ministerial Session, that he or she is fit to be admitted into "full connexion" and ordination. The Representative Session must then resolve that he or she is to be admitted and ordained. By being ordained and received into full connexion, standing orders provide that the Conference enters into a covenant relationship with ministers, in which the latter are held accountable by the Church, in respect of their ministry and Christian discipleship, and are accounted for by the Church in respect of their deployment and the support they require for their ministry. By standing orders ministers in this relationship accept "…a common discipline of stationing and collegially exercise pastoral responsibility for the Church" (Preston, paragraph 15).

1. "Stationing", which is a critical part of the management of the Church, is the formal act by which a minister is assigned to particular duties. Standing orders make detailed provision for the process by which a minister is stationed.

1. The Circuit Invitation Committee issues an invitation, on the proposal of the Stewards. Once a year, the invitations are reported to the Stationing Committee of the Conference. That Committee makes recommendations to the Representative Session of the next Conference, which makes the final decision.

1. Unlike the position that applies in the Church of England, there is no local involvement in the process at all. There is no Bishop and there is no Oath of Canonical Obedience. The process of stationing takes place pursuant to full connexion, which constitutes a life long relationship with the Methodist Church and is wholly dependent on the Deed of Union and standing orders. Lord Sumption described the ministry as a vocation, by which ministers submit themselves to the discipline of the Church for life. The suggested contract, it was held, simply did not fit within the particular scheme of the Methodist Church and its constitution.

1. I can identify nothing in the findings of the Employment Judge with regard to the Church of England and this Claimant's appointment to the post at the Teme Valley Benefice that is comparable with full connexion and stationing, the crucial factors that led to the conclusion that the relationship between Ms Preston and the Methodist Church was not one of contract. In the Church of England ordination does not by itself confer a right to any appointment, as the Employment Judge found. The Church is under no obligation to find a post for an ordained minister and there is no process enabling an ordained minister to live in a parsonage or to receive an income, pending his or her appointment to a particular post.

1. Further, as the Employment Judge found, the Bishop of Worchester, or the Bishop of Dudley as Suffragan Bishop and his delegated deputy, played a central role in the appointment of this Claimant to his post. The Bishop's Papers refer expressly to the Bishop having "ultimate responsibility for the pastoral care of your parish and the appointment of the new incumbent, even if he is not the patron of your parish".

1. Mrs Miles consulted with the Bishop and the PCC of each parish to agree the process of appointment. After advertisement, written application, short-listing and a successful interview by a panel which included the Bishop of Dudley, the Claimant was agreed to be the preferred candidate. Pursuant to s13(6) of the Patronage (Benefices) Measure 1986 the Claimant was then "presented" to the Bishop by the Patron and was offered the appointment as Rector to the Benefice in the letter of 26 October 2004. The Claimant accepted that offer in writing in his letter of 27 October 2004. On 12 November 2004 the Bishop wrote to the Claimant confirming the arrangements for his "institution" as Rector, that being the process by which the Bishop puts the incumbent in possession of the cure of souls.

1. Before the Rector is instituted, as the judge found, he must subscribe to a Declaration of Assent and, in the presence of the Bishop or the Bishop's commissary, take the Oaths of Allegiance and of Canonical Obedience described in Canon C15. There appears to be no such oath, or any equivalent declaration of obedience, in the Methodist Church.

1. After institution, the bishop then issues directions for induction to the Archdeacon (Canon C11(1) and (2)). The ceremonial nature of the Rector's installation is obviously an important part of the process, having regard to the spiritual nature of his duties. However, I accept Mr Bowers' submission that a ceremonial requirement of this nature cannot be said to detract from the existence, in law, of a contractual arrangement between the parties, if all the indicia of a contract are otherwise present.

1. There are further, significant factual differences between Preston and the present case. Once in post, as Lord Sumption pointed out, Ms Preston continued to receive her stipend even in the event of sickness or injury. This was one of the specific factors he considered pointed away from the existence of a contractual relationship. By contrast, in this Claimant's case, while he would continue to receive his stipend in full to begin with, if he was absent through sickness, this reduced to half pay after a period of 28 weeks and ceased altogether after 52 weeks.

1. As the Employment Judge noted, it was not difficult to understand the Claimant's view that the stipend stopped when the job was not being done. In addition, since archdeacons receive a higher stipend than rectors and bishops receive more than archdeacons, the judge acknowledged that the current system could properly be described as one which "rewards more responsibility with more money".

1. In relation to disciplinary powers and termination of the relationship, the disciplinary scheme of the Methodist Church is the same for all the members of that Church, whether they are ministers or ordinary lay members. The Methodist minister has no unilateral right to resign, even on notice. As Lord Sumption explained, a minister can cease to be in full connexion only in limited circumstances, none of which is wholly dependent on his or her wishes. By contrast, as the Employment Judge found, a rector in the Church of England can voluntarily resign his benefice, although he or she is required to submit notice in writing to the Bishop, in a prescribed form.

**Grounds of appeal**

1. The Claimant advances six main grounds of appeal, dealt with at the hearing in a different order from that which appears in the Notice of Appeal. Each raises a number of separate points, but they are sensibly grouped together under the main headings. The Answer filed by the Respondents approached them as if each sub-paragraph was a free-standing complaint, and their written and oral submissions were correspondingly lengthy and detailed. I have considered all the many points and submissions made, but shall deal in this judgment only with those which I consider necessary to determine the issues arising on this appeal. There was a dispute before the EAT as to whether the Claimant should be permitted to advance some of his submissions, in relation mainly to grounds (2) – (4) (see below). Mr Tattersall complained that in a number of respects Mr Bowers was advancing new points, or basing his arguments on evidence not previously adduced below. As will be apparent from my conclusions in this appeal, it is unnecessary, in the event, for me to resolve this dispute.

(1) Failure to apply binding authority

1. The first ground is that the Employment Judge failed correctly to apply binding authority.

1. It is clear that the Employment Judge focussed mainly on whether a contract of employment was to be implied between the parties in this case. In doing so, he was addressing the Respondents' contention that a contract can only be implied if it necessary to imply one, and that, on the facts of this case, it was unnecessary to imply any contract because the parties would have acted in exactly the same way even in the absence of any contract.

1. The judge accepted this argument, finding that the Claimant's relationships with the Church were defined by law and there was consequently no need for the implication of a contract between them. The Bishop's "limited powers to instruct or supervise" the Claimant, were powers "defined by law". As Mr Tattersall submitted, the primary basis upon which the judge found there was no implied contract was that, by reason of the Claimant's appointment to the office of incumbent, his relationship with the Bishop was defined by ecclesiastical law and there was no necessity for any contract.

1. In my judgment, however, following the decision in Preston this finding, based on the necessity to find a contract, was arrived at in error. The same argument was advanced in the Supreme Court by the President of the Methodist Conference, namely that in the absence of anything in the Deed of Union and standing orders amounting to an express contract of employment it was necessary to imply one. The essential features of the arrangements described in these instruments were capable of being explained without reference to a contractual, employment relationship. The test being one of necessity, it was therefore unnecessary to imply a contract of employment.

1. This argument was rejected for the three reasons given by Lord Sumption at paragraph 12. As he made clear, it was not sensible to regard the relationship between the minister and the Church as implied. It was documented in great detail in the Deed of Union and the standing orders. The real question was whether the incidents of the relationship described in those documents, properly analysed, were characteristic of a contract and, if so, whether it was a contract of employment. Necessity did not come into it.

1. I therefore accept Mr Bowers' submission that, in this case, the focus should have been on whether there was an express contract between the Claimant and the Bishop, having regard to the rules and practices of the Church and the particular arrangements made with the Claimant. The existence of an express contract has always been the Claimant's primary submission. The judge should therefore have conducted a careful analysis of the rules and practices of the Church, the manner in which the Claimant was engaged and the particular arrangements made with him, as revealed by all the relevant documentation, including the Bishop's Papers and the various Canons and Measures, in order to determine whether, properly analysed, they were characteristic of a contract and, if so, whether it was a contract of employment.

1. However, the only consideration given to the existence of an express contract appears at paragraph 168 of the judgment, where it is rejected in brief terms. The only reasons given for rejecting it are that the written offer and acceptance of appointment on terms did not take effect in law until due ceremony was observed; that the Patron, Mrs Miles, could not be said to be the other contracting party; that she could not be said to have been making the offer of appointment on behalf of either the DBF or the Bishop, whose choice she had the right to refuse; and that an intention to create legal relations about terms and conditions could not be attributed to her.

1. In failing to carry out the full analysis that Preston now establishes is required, and in approaching the issue by asking whether it was necessary in this case to imply a contract between the parties, I consider that the Employment Judge was in error. The appeal is therefore allowed on that first ground.

1. Mr Tattersall submits that, if the judge is found to have applied the wrong tests, the matter must be remitted to the Tribunal to be determined afresh. Mr Bowers invites the EAT to consider determining the matter itself, or alternatively to remit for a fresh hearing. In my view the right course is to remit this case for rehearing before a fresh Tribunal, which is the appropriate forum for a full analysis of all the facts and matters that must be considered in determining whether a contract exists and, if so, whether it is a contract of employment. I now go on to consider the other elements of this appeal, to the extent that there are said to be legal errors in the judge's analysis.

(2) Failing properly to analyse whether there was an offer of a contract

(3) Errors in the analysis which led to the conclusion that there was no contract

(4) Errors in the failure to identify the Bishop as the appropriate contracting party

1. It is convenient to deal with these three grounds of appeal together, because there is considerable overlap.

1. Underpinning the judge's conclusions, throughout his reasoning, is his finding that the relationship between the Claimant and the Bishop was defined by ecclesiastical or canon law. That is common ground in this appeal. It was the basis upon which he found there was no need for a contract to be implied. Such powers of supervision and instruction of the Claimant as he found the Bishop to have were found to be exercisable in the course of his own statutory duties, to ensure the proper use of churches and the holding of services.

1. This finding, that regulation by canon law precluded a contractual relationship, was also, in my judgment, arrived at in error. It is correct, as the factual findings demonstrate, that many, though by no means all of the terms attaching to the post of rector are dictated, or shaped by canon law, or explained by the nature of the Claimant's office. Yet neither feature precludes a finding that the Claimant was also carrying out his work pursuant to a contract of employment, as the judgments in Percy and Preston make clear.

1. The fact that many terms, under which other professionals carry out their work, are derived from legislation is not a basis for denying their status as employees working under a contract. The pay and conditions of many teachers are governed by statutory instrument, for example. Statute also regulates the terms and conditions of many office holders working in local government (see Johnson v Ryan (above) and [R (Shoesmith) v OFSTED ]()[2011] IRLR 679 (paragraphs 90-92)).

1. The fact that the relevant legislation in those cases is secular rather than ecclesiastical, is, in my view, irrelevant to a determination as to whether the relevant office holder or professional is working under a contract of employment. The observations of Lord Nicholls, in Percy, that the context for these issues is statutory protection for employees, and that employment arrangements between a church and its ministers should not lightly be taken as intended to deprive ministers of that protection, are of particular significance in this respect. I consider the judge was wrong to regard the role played by ecclesiastical law in this case as a basis for distinguishing this case from Percy. *As Lord Nicholls pointed out (see paragraphs 40-41), a finding that Ms Percy had a contract over which the civil courts had jurisdiction did not "usurp the Church's exclusive jurisdiction in the exercise of its disciplinary powers" over spiritual matters, under the Church of Scotland Act 1921*.

1. The finding of the Employment Judge that this Claimant had a legal relationship with the Church "in a broad sense", but that this was "imposed by the law itself", thereby precluding the existence of a contract, was therefore an error of law. While such a regulatory background will increase the number of standard, or non-negotiable terms and conditions, it does not in my judgment preclude the existence of a contract of employment.

1. Many employees, particularly those working in the public sector, are offered, and accept, employment in occupations for which there are standard, non-negotiable terms and conditions, including in many cases their grade and salary. The real question in this case was whether, in accepting the offer of appointment as Rector of the Benefice, this Claimant was agreeing to accept the terms of that appointment, as determined by ecclesiastical law or otherwise. It is important to avoid what Lord Sumption described as the "abstract categorisation" of ministers of religion, in determining their employment status. Hence the importance, absent in this case, of a detailed and careful analysis of the rules and practices of the Church of England, of the manner in which the Claimant was engaged and of the particular arrangements made with him, in determining whether there was here an express contract.

1. In my judgment, the conclusion that the Claimant's relationship with the Bishop was defined exclusively by ecclesiastical law, led the judge into legal error in a number of other respects in his analysis as to the existence of a contract.

1. The fact that the Claimant's appointment did not take effect as a matter of ecclesiastical law until due ceremony was observed is, in my view, irrelevant to the question whether a contract existed. Some form of ceremonial induction is a common feature of a number of academic appointments, for example, but such ceremony does not detract from the existence of a contract between the academic and the relevant institution. In addition, many offers of employment are made subject to medical or CRB checks, for example, and in that sense do not depend on the will of the parties alone. Yet checks of this kind do not preclude the existence of a contract. The reasoning in this case seems to me to be akin to reasoning that the spiritual nature of the relationship justified denying contractual effect to the arrangement, now clearly abandoned following Percy and Preston.

1. Further, the fact that matters such as his hours of work, or the timing of his holidays, were not governed by ecclesiastical law, but were left to the Claimant's discretion, with guidelines as to its exercise, cannot as a matter of law detract from the existence of a contract. Many contracts of employment allow for flexible, working time or holiday arrangements.

1. Similarly, the fact that the stipend was fixed and was found not to be a freely negotiated sum that played any part in the interview process, cannot be regarded as precluding the existence of a contract, and I accept Mr Bowers' submissions in this respect. Many employees working under a contract of employment will have accepted the offer of employment on exactly the same basis. The fact that there was no negotiation as to the stipend, which was found to be fixed by the Claimant's Diocese, cannot be regarded as indicating that no contract was formed. The same applies, as it seems to me, to the source of the stipend and the fact that the power to pay it derives from statute.

1. The real question is whether the stipend was remuneration for the work the Claimant was required to undertake. The Employment Judge correctly identified the question, namely "whether the amount and payment of the stipend is a contractual obligation" (see paragraph 41), but it does not appear to me that he answered it or sufficiently explained his reasoning.

1. While it is correct that "…the payment of money for the discharge of an office does not automatically imply a contract between the parties…" (paragraph 175), the judge appeared to recognise the legitimacy of the Claimant's view, in relation to sick pay, that the stipend stopped when the job was not being done, and, in relation to the higher sums paid to archdeacons and bishops, that the current system rewarded more responsibility with more money. As Baroness Hale observed in Percy, "…the notion that Ms Percy's '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." Mr Bowers points, in addition, to the findings of fact that the Claimant was on the clergy payroll operated by the Church Commissioners; that tax was paid via PAYE and National Insurance contributions deducted at source; that the Claimant was entitled to sick pay; and that he was a member of the pension scheme funded by the Church.

1. Further, the conclusion at paragraph 173.1, based on the finding that the Claimant's relationship with the Church was imposed by law, that the Bishop's Papers could not be regarded as contractual documents, flies clearly in the face of the requirement for a full analysis of all the relevant documentation required by Preston. Such an analysis is entirely consistent with the general requirement that the terms of a contract are to be determined at the time the particular agreement is concluded, having regard to all the surrounding circumstances within the knowledge of the parties at that time (see Lexington Insurance Co v AGF Insurance Limited [2010] 1 AC 180, at paragraph 45).

1. There can be no doubt in this case that consideration of the rules and practices of the Church, the manner of the Claimant's engagement and the particular arrangements made with him, requires detailed examination of the Bishop's Papers together with all other materials evidencing such rules and arrangements as referred to by the Employment Judge. While many sections of these Papers were found to deal only with spiritual matters, or to be insufficiently certain to be contractually binding, one of the seven sections to which my attention was drawn dealt expressly with terms of service. The Claimant contended below that they set out most of the express terms of his contract with the Bishop. The Papers were found to be specific to the Worcester Diocese and, as the judge found, the entirety of the Claimant's relations with the Church were confined to that Diocese. The arrangements at local level were therefore of particular relevance in this case.

1. My attention was drawn in particular to provisions in the Papers relating, for example, to hours of work (A.3); sabbatical leave (A.5); the level of annual leave, which "may not normally be carried forward to subsequent years", with additional entitlement to compassionate leave and maternity/paternity leave (A.8); provisions relating to removal costs and resettlement grants (F.1) and to the stipend and council tax (F.2-F.4); provisions relating to sickness and statutory sick pay (F.7), repeated in the letter from the Bishop contained in the Papers; car loan funds and death in service provisions (F.9-F.10); pension provisions (F.14); and provisions dealing with appraisals, expressed in terms of an obligation to carry out formal appraisal interviews every six years (A.2). Some of the language is expressed in terms of obligation. On other occasions it is discretionary or advisory.

1. The Employment Judge made brief reference to some of these matters at paragraphs 32, 47, and 51-53, and it is clear that the Papers were before him. They were referred to in oral evidence and submissions, and the judge noted the submission of the Claimant's counsel that they were similar to an 'employee's handbook'.

1. Having regard to their obvious relevance, I accept Mr Bowers' submission that the finding that the Bishop's Papers were neither representative of, nor evidence of a contract, that they were not apt for incorporation and that they could not be considered as contractual documents, was perverse. It is precisely this sort of documentation, together with the relevant Canons and other instruments referred to, against which the parties' intentions should have been carefully analysed, and to which Lord Sumption was referring in Preston. The fact that some of the contents dealt only with spiritual matters, or were now out of date, does not detract from the relevance of these documents in the overall analysis.

1. Mr Bowers submits that, in analysing whether there was an offer of a contract to this Claimant, the judge failed properly to assess the elements of control and direction by the Bishop. He contends that no weight, or too little weight was given in this respect to the Oath of Canonical Obedience that the Claimant was required to take, and to the residual powers of the Bishop with regard to direction, control and discipline of the Claimant.

1. He makes a further complaint as to the reliance placed on the opinion evidence of Professor McClean in this context. This is a specific example of his more general criticism made, in the sixth ground of appeal, that the Professor was allowed, impermissibly, to express personal opinions on issues of fact and law which were solely the province of the Employment Judge, and upon which the judge erroneously placed undue weight.

1. As Mr Tattersall rightly points out, the assessment of evidence and matters of weight are pre-eminently for the Employment Tribunal and not for the EAT. The question for the EAT is whether the judge erred in law in arriving at his conclusions in this respect.

1. The judge found that an incumbent's relationship with his Bishop is governed by the Ordinal and the Canons. The nature of that relationship was the subject of considerable dispute below.

1. One of the judge's reasons for concluding that there was no express contract was that the Claimant's appointment did not take effect as a matter of ecclesiastical law until due ceremony was observed, so that any contract did not depend on the will of the parties alone. These ceremonies and their significance in the Claimant's appointment were described at paragraphs 28-29 of the judgment and are referred to above. The Claimant had to make a Declaration of Assent to the faith of the Church, take the Oath of Allegiance to the Sovereign and, pursuant to Canon C14(3), take an Oath of Canonical Obedience to the Bishop. This latter oath, though taken on ordination, is required to be repeated on taking up a new appointment.

1. In taking it the Claimant promises to "….pay true and canonical obedience to the Lord Bishop of…..and his successors in all things lawful and honest." Canon C1 provides, at paragraph 3, that "….the inferior clergy who have received authority to minister in any diocese owe canonical obedience in all things lawful and honest to the bishop of the same…."

1. Although the judge found this to be central to the appointments process, he appears, subsequently (paragraph 58), to accept Professor McClean's opinion that this promise is "largely symbolic and in practice has little, if any, real effect", being "no more than a promise to obey the canon law." His finding, in relation to this oath and other matters, was that Professor McClean's evidence accurately reflected practice within the Church.

1. The judge also referred to various extracts from the Canons, which concern the Bishop's authority and powers. Of particular relevance in this context is Canon C18(7), pursuant to which the judge found that every bishop has the power to correct and punish the disobedient or criminal within his diocese. The judge found (paragraph 61) that this "no longer has any meaning outside the statutory disciplinary procedure". The basis for this conclusion is unclear. The Respondents suggest it is based on oral evidence about what happens in practice, from Archdeacon Trethewey and from Professor McClean, who described the powers of the bishop contained in the Canons as "toothless provisions".

1. The disciplinary procedure referred to is apparently the CDM 2003, which provides, at section 1, "Anybody or person on whom functions in connection with the discipline of persons in Holy Orders are conferred by this Measure shall, in exercising those functions, have due regard to the role in that connection of the bishop or archbishop, who, by virtue of his office and consecration, is required to administer discipline." The CDM Code of Practice states, at paragraph 90, "It is a fundamental principle of clergy discipline that the diocesan bishop at all times is responsible for administering discipline over the clergy within the bishop's cure. Where others perform any disciplinary function they do so only on the bishop's behalf."

1. It is clear, notwithstanding these express provisions, that the judge accepted the oral evidence, including the opinion of Professor McClean, in regarding the Bishop of Worcester's powers of discipline as effectively toothless provisions, which had little effect in practice. He found that the Bishop was not in the habit of issuing instructions because he knew that he had no right to do so in the sense of an employer issuing instructions to a subordinate. On the other hand, he also accepted the Professor's evidence that a rector is expected to adhere to the main doctrines and tenets of the Church, and that persistent teaching contrary to them would be likely to result in disciplinary action under the statutory provisions.

1. As a matter of law, however, how often the Bishop may use these powers in practice, and how many complaints are referred to the Bishop's Disciplinary Tribunal each year, are not determinative of the legal relationship with the Claimant and whether that relationship is contractual. What matters is the existence of residuary powers of control and discipline, not the extent or frequency of their application in practice. Similarly, the fact that the Bishop exercised limited powers of supervision and instruction in practice, and that the Claimant had considerable autonomy in carrying out his duties do not themselves deny the existence of a contractual relationship (see the observations of Baroness Hale in Percy, of Lord Phillips in CCWS, and of Ward LJ in JGE, referred to above in relation to the significance of control).

1. I therefore accept Mr Bowers' submission that, in analysing the Bishop's powers, contained in Canons which in part command obedience in prescriptive terms, by relying on oral evidence as to their effect and to the manner and extent to which they were exercised in practice, the judge was in error. I shall deal with the general criticism concerning Professor McClean's evidence later on.

1. The fourth ground of appeal raises alleged errors in the judge's analysis in failing to identify the Bishop as the appropriate contracting party.

1. In this respect, the judge noted that the Claimant had to establish a consensual, contractual element in the relationship with his Church, represented by the Respondents he had joined to his claim. Mr Bowers does not suggest that such a relationship with the DBF could be established. He submits that the judge fell into error in analysing whether the Bishop was the appropriate contracting party.

1. The judge found that the Claimant had not identified any party with whom he could be said to have contracted, and that this was an insurmountable barrier to his claim. His reasoning appears from paragraph 178, which, for convenience, I now repeat.

"I do not find there could be a contractual relationship between Mr Sharpe and the Bishop. The power to pay a stipend is a statutory one and it lies with the DBF. The Bishop has undertaken no obligation to pay it and does not have control of the necessary funds to make good any such obligation. Whilst he may have some limited powers to instruct or supervise Mr Sharpe … they are not extensive and again, they are defined by law. They do not arise from any consensual arrangement. They are mostly exercisable by the Bishop in the course of his own statutory duties to ensure the proper use of churches and the holding of services. The Bishop cannot instigate disciplinary procedures, which are statutory and concerned primarily with the minister's conduct as a minister rather than specific to his appointment at Teme Valley South."

1. He went on to suggest that, though mindful of Lord Nicholls' dicta in Percy, concerning the difficulties of identifying contracting parties in a national church with a multiplicity of bodies and committees, the Claimant's counsel had effectively been casting around for "any convenient peg on which to hang the suggested contract", which was impermissible.

1. The errors I consider exist in the judge's analysis at paragraph 178 will be apparent from my earlier findings in this appeal. At its heart lies his reasoning, which I find to be erroneous, that the limited powers the Bishop has are defined by canon law, precluding any consensual, contractual arrangement. The fact that they are exercisable in the course of the Bishop's own statutory duties to ensure the proper use of churches is, in my view, irrelevant.

1. The suggestion that the Bishop cannot be a contracting party because he does not himself pay, or have any obligation to pay the stipend and because he cannot himself instigate disciplinary proceedings, seems to me to fall comfortably within the caution expressed by Lord Nicholls as to the "fragmentation of functions" at paragraphs 27-28 of Percy. Such fragmentation of functions, within an organisation such as the Church of England, may make it difficult to pin the role of employer on any particular board, committee or individual. This internal fragmentation, however, ought not to stand in the way of otherwise well-founded claims. The real question is whether, after a full analysis of all the relevant circumstances as required by Preston, this is such a claim.

1. Mr Bowers spent some time in written submissions and oral argument referring to the detailed evidence before the Employment Judge as to the Bishop's role in the process of appointment, in relation to the Patron, Mrs Miles, and in relation to disciplinary matters. He did so in order to advance a submission that all of the factors, properly analysed, point strongly towards the Bishop having adequate control of the Claimant to indicate that he was the other party to a contract of employment or, alternatively, was the other party to a contract with the Claimant as a worker. The finding to the contrary was, he submits, perverse.

1. Mr Tattersall, on behalf of the Respondents, referred in turn to other, detailed aspects of the evidence, in submitting that the judge was entitled to conclude as he did so far as concerns the Bishop as an appropriate contracting party. He also raised objection to some of the points made and documents referred to by Mr Bowers on appeal, on the basis that they had not previously been advanced before the Employment Tribunal.

1. In my view, however, the precise role of the Bishop in these and other matters forms part of the careful examination and analysis that must now be carried out into the rules and practices of the Church, the manner of the Claimant's appointment and the particular arrangements made with him in his post. Determining whether there is an express contract and, if so, who is the appropriate contracting party and whether it is a contract of employment must follow that analysis, applying the legal principles set out in this judgment. It is therefore unnecessary for me to deal with the procedural dispute as to the scope of the Claimant's arguments on appeal and whether, in particular in advancing arguments based on perversity, he was seeking impermissibly to rely on fresh evidence, or taking points not ventilated below.

(5) Expert evidence of Professor McClean

1. Relying on De Keyser Ltd v Wilson [2001] IRLR 324, Mr Bowers submits that the process for determining in advance the admissibility of expert evidence, and, if admissible, the issues to which it is to be confined, was regrettably short-circuited in this case. The result was that Professor McClean, who was clearly called as an expert witness, strayed well beyond his area of expertise, namely ecclesiastical law and the structures of the Church of England, into those matters of fact and law which were solely within the province of the Employment Judge. Further, he was permitted freely to express opinions on those matters, including matters in which he clearly had a personal involvement and interest, and the judge erroneously had regard to them in coming to his conclusions. The necessary findings of fact, the construction of relevant documents, and the decision as to whether a contract existed between these parties were all matters on which expert opinion was inadmissible and the judge erred in having regard to it.

1. Mr Tattersall submits that all the statements, including a statement from Professor McClean, were before the Tribunal in advance of the hearing; that no concerns were raised about his evidence at the hearing; and that the contention that this experienced Employment Judge was unable to follow his clear direction to himself to exercise caution in relation to this witness, where necessary, is unarguable. The judge, who was said by Mr Tattersall to be on a 'steep learning curve' in relation to ecclesiastical law, did not err either in admitting this evidence or in having regard to it in the way that he did.

1. In De Keyser the EAT observed, at paragraph 36, that careful thought should always be given to the calling of expert evidence and to the circumstances in which it may be helpful, having regard to the guidance given in reported cases in civil proceedings and to CPR 35.1-35.14. CPR 35.4(1) provides that "No party may call an expert or put in evidence an expert's report without the court's permission". In De Keyser the EAT said that, "...A prudent party will first explore with the employment tribunal at a directions hearing or in correspondence whether, in principle, expert evidence is likely to be acceptable."

1. Most unfortunately, despite a number of case management discussions, that appears not to have happened in this case. It also appears that counsel for the Claimant did not formally apply for such evidence to be ruled inadmissible.

1. The dangers inherent in the failure to consider, in advance, the relevance and admissibility of such evidence and the qualifications and independence of the proposed expert, are in my view apparent from paragraph 11 of the judgment. The judge there recorded that the Claimant's view, that this particular expert was biased, was "not without some justification", Professor McClean having chaired the Committee that considered members of the clergy had no employment status, and that recommended against a change to the current position.

1. It is also clear that the Professor did not always confine himself to factual matters within his expertise, the judge finding that his evidence contained,

"…a good deal of opinion that effectively amounted to submissions about the claimant's relationship with his Church being other than one based in contract. As one might expect, such opinion was given from the viewpoint of someone who had made a study and was justifying the conclusion he had reached."

Part of Professor McClean's 'submissions' included a reference to the "disastrous consequences" that would follow from a decision in the Claimant's favour.

1. Notwithstanding the absence of any formal application for this evidence to be ruled inadmissible, I consider the judge's failure to consider its admissibility and his decision to permit expert opinion to be advanced on the very issues he had to determine was an error. It is correct that he directed himself to treat the Professor's evidence with caution and to be careful to separate fact from advocacy. Yet the opinions expressed, as the judge found, trespassed at times on matters solely within the province of the Employment Judge. Further, and importantly, his evidence was not entirely independent. Evidence on matters solely within the province of the Employment Judge was plainly inadmissible. As paragraph 35.2.2 RSC states, "..it is not the function of an expert witness to give the opinion on the issues of law or fact which the judge or jury has to decide".

1. Having allowed the evidence to be given, and despite his self-direction to exercise caution, it is apparent, for the reasons already referred to above, that the judge did not in fact draw the lines he had set for himself but instead accepted much of Professor McClean's evidence uncritically, relying upon it in arriving at a number of his conclusions in this case (see for example paragraphs 58 and 77-80 in relation to the Oath of Canonical Obedience, the "apparent powers of the Bishop in the Canons" and the relationship between rectors and the DBF).

1. Before any rehearing of this case, the Tribunal should be asked to determine, at a Preliminary Hearing to consider case management orders, attended by both sides, the extent to which evidence from an appropriately qualified and independent expert is admissible in this case, and the issues to which it is relevant.

(6) Errors in the approach to the question whether the Claimant was a 'worker'

1. The Claimant's primary submission was, and remains that he was an employee working under a contract of employment. In the alternative, he contends that he was a worker within the meaning of s.43K(1)(a) or s.230(3)(b) Employment Rights Act 1996, as amended. Mr Bowers submits that the judge erred in his interpretation of these statutory provisions and that his finding, that the Claimant was not a worker within the meaning of either provision, cannot be sustained. Mr Tattersall submits that the judge's analysis and findings of fact are unassailable.

1. S.43K(1)provides:

"For the purposes of this Part 'worker' includes an individual who is not a worker as defined by section 230(3) but who:

(a) works or worked for a person in circumstances in which -

(i) he is or was introduced or supplied to do that work by a third person, and

(ii) the terms on which he is or was engaged to do the work are or were in practice substantially determined not by him but by the person for whom he works or worked, by the third person or by both of them,

(b) contracts or contracted with a person, for the purposes of that person's business, for the execution of work to be done in a place not under the control or management of that person and would fall within section 230(3)(b) if for 'personally' in that provision there were substituted '(whether personally or otherwise)',"

**

1. In Croke v Hydro Aluminium Worcester Ltd [2007] ICR 1303 the EAT had regard to the discrimination context for public interest disclosure claims in interpreting s.43K(1)(a) and the extended definition of "worker". The need to be cautious before transplanting an approach which was appropriate to one set of legislative provisions (in that case provisions under the Disability Discrimination Act 1995), did not prevent the EAT recognising,

"as the Court of Appeal did in MHC Consulting Services Ltd v Tansell [2000] ICR 789, and in Woodward v Abbey National plc (No.1) [2006] ICR 1436, that where statutory provisions are explicitly for the purpose of providing protection from discrimination or victimisation it is appropriate to construe those provisions so far as one properly can to provide protection rather than deny it."

1. I accept Mr Bowers' submission that a broad interpretation of the statutory language is therefore required. He submits that it is clear from the judgment (at paragraphs 183-185) that the Employment Judge erroneously adopted a restrictive approach in considering whether, on the facts, this Claimant was a worker. Mr Tattersall submits that the judge adopted the correct approach, considered each element of the statutory provisions, made clear findings of fact, with which the EAT should not interfere, and arrived at properly reasoned conclusions.

1. The judge made three findings, as set out above. First, the Claimant was not, as he contended, "introduced" by the Bishop as a third person, to carry out his work for the PCC and the parishioners. Secondly, the terms were not "substantially determined" by either Respondent or by any hypothetical third party introducer.

1. Thirdly, the attempt to introduce a third person into the equation was an attempt to circumvent the requirement for a contract by relying on the omission of the word "contract" from any part of paragraph (a). Even if the Claimant were right that the Bishop had introduced him, the phrase "the terms on which he is engaged to do the work" envisage terms that are capable of legal enforcement and imply the existence of a contract. The purpose of this provision was to protect agency, or contract workers and it would be a significant departure from existing law, outside the normal remit of employment legislation, to enact a definition of "worker" that was to apply in the absence of a contract. In order to qualify, a worker must have a contract with at least one of either the supplier/introducer or the end user of his services.

1. In addressing this question on the basis that there is no warrant for taking a broad approach, involving a departure from existing law, I consider that the judge fell into error. The whole purpose of this statutory extension was to go beyond the normal remit of employment legislation. In my judgment, properly construed, the words "terms on which he is or was engaged to do the work" do not imply the existence of a contract. The judge was wrong to determine this issue on that basis. Since the case is to be remitted for re-hearing, I do not go on to consider the Claimant's submission that the judge's conclusions were perverse. The extent to which the Claimant can rely upon this provision will depend on the full analysis and factual findings.

1. In addition to s.43K(1)(b), s.230(3)(b) provides, materially:

"S.230(3) In this Act "worker"…..means an individual who has entered into or works under (or, where the employment has ceased, worked under)

(a) a contract of employment, or

(b) any other contract, whether express or implied and (if it is express) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual;

and any reference to a worker's contract shall be construed accordingly."

1. The judge decided that the Claimant had an "unfettered right" to delegate the functions of his office to a suitably qualified person, at any time and for any reason. The fact that his absence from the benefice for more than three months required the Bishop's consent did not significantly alter this right. Nor did the fact that the Claimant would not be expected to pay the substitute himself. It was not relevant that this right was not actually exercised. In taking up and performing his office the judge held that the Claimant did not undertake always to carry it out personally.

1. This finding, that the Claimant was able freely to decide whether or not to carry out his work personally, seems to me to be contrary to the judge's earlier finding, at paragraph 35.5.8, that Canon C24(8) provides "if at any time, a priest is unable to discharge his duties, 'whether from non-residence or some other cause, [they] shall provide for [their] cure to be supplied by a priest licensed or otherwise approved of by the Bishop of the Diocese.' "

1. Thus the Claimant's right to delegate can be exercised only in the case of his inability to discharge his duties, not his unwillingness to do so. Further, he can delegate only to a priest licensed or approved by the Bishop. It is not therefore an unfettered right. It appears that the judge based this finding, at paragraph 193, on the Claimant's oral evidence about delegation, but the Canon is a binding instrument. It provides for a fettered right of substitution in the circumstances of inability. The judge's finding that it was an unfettered right was therefore arrived at in error.

1. In Macfarlane v Glasgow City Council [2001] IRLR 7 the nature of the substitution, on the part of Council gymnastic instructors, was described by the EAT in the following terms:

"The Tanton [1999] IRLR 367 case is in our judgment distinguishable from that at hand for at least the following cumulative reasons. Firstly, the appellants in our case could not simply choose not to attend or not to work in person. Only if an appellant was unable to attend could she arrange for another to take her class. Secondly, she could not provide anyone who was suitable as a replacement for her but only someone from the council's own register. To that extent the council could veto a replacement and also could ensure that such persons as were named on the register were persons in whom the council could repose trust and confidence. Thirdly, the council itself sometimes organised the replacement (without, it seems, protest from the appellant concerned that it had no right to do so). Fourthly, the council did not pay the appellants for time served by a substitute but instead paid the substitute direct. There is no finding as to what the substitutes were paid, nor that they were paid the same as the appellants, nor that the appellants had any say in what the substitutes were paid. These four grounds in our view provide ample reasons for the Tanton [1999] IRLR 367 case to be distinguished; but unfortunately only the last of the four was considered by the tribunal in our case."

The EAT concluded that the Employment Tribunal had erred in deciding that a contract of employment must necessarily contain an obligation on the part of the employee to provide his service personally. A provision allowing for a limited ability to delegate does not lead automatically to a conclusion that a contract was one for services as opposed to a contract of service.

1. In this case the Claimant could not simply choose not to attend his parishioners or conduct services. Only if he was unable to do so could he arrange a substitute, and that person had to be someone approved by the Bishop. The Claimant was not expected to pay the substitute himself. These bases for distinguishing the case of McFarlane from the case of Express and Echo Publications v Tanton [1999] IRLR 367 apply equally, in my view, in the present case. The case of Tanton was also distinguished in Byrne Bros (Formwork Ltd) v Baird [2002] ICR 667, where the contract provided that services could be provided by a substitute only where the individual was unable to provide his services, and then only after having obtained the express approval of the contractor. The power to appoint a substitute was said in this way to be "qualified and exceptional" (see paragraph 15).

1. Having regard to these authorities the Claimant's qualified right to delegate does not, in my judgment, detract from the personal obligation to carry out his work. The judge therefore applied the wrong test. His decision that the Claimant was not a "worker" within the meaning of s.230(3)(b) was therefore arrived at in error.

1. For the reasons given above, this appeal succeeds. The case should now be remitted to the Employment Tribunal for a fresh hearing in accordance with the legal principles set out in this judgment.