Are Clergy Employees?

Although I agreed on a short notice to take part in this workshop on labour legislation, I will try my utmost best to address the topic given to me. The crisp question to be decided is "are clergy employees?" Another ancillary issue, which is inextricably linked to the one I have just referred to, is whether churches are regarded as employers. It is imperative to state that, Doug Tilton in his explanatory notes sent to me giving background information to this topic, referred me to the decision in the English Law where it was held that a priest is not an employee.

I think it is wise to begin to address this ruling and other relevant decisions tendered in terms of the English Law in order to ensure that we are all on the same wavelength even before I sketch out the South African jurisprudence on this topic.

These decisions were President of the Methodist Conference v Parfitt 1983 (3) ALLER 747 and Davies v Presbyterian Church of Wales 1986 (1) ALLER 705. In short both these decisions held that the relationship between a minister of religion and his church is not founded on contract and he is not an employee of the church. In the last-mentioned case the following was stated:

The duties owed by the pastor of the Church are not contractual or enforceable. A pastor is called and accepts the call. He does not devote his working life but his whole life to the Church and his religion. His duties are defined and his activities are dictated not by contract but by his conscience. He is the servant of God. If his manner of serving God is not acceptable to the Church, then his pastorate can be brought to an end by the Church in accordance with the rules i.e. of the Church.

It must firstly, however, be pointed out that the evidence in that case established that an ordained minister in the Presbyterian Church of Wales is only induced once the congregation stand witness to the fact that the minister has been called to be its minister in the Lord. Secondly, the question that had to be determined in that case was a question of law, namely, whether on the true construction of the book of rules a pastor of that Church is employed and is under a contract of service. The reason being that the applicable legislation in English laws defines an "employee” as "an individual who has entered into a contract of employment". It must thirdly be pointed out that the same court expressly stated that it is in fact possible for a man to be employed as a servant or as an independent contractor to carry out duties which are exclusively spiritual. The appellant in that case failed to point to any contract between himself and the Church. The book of rules, referred to above, which provided for the appointment and induction of an ordained minister to be a pastor to take charge of one local church did not, according tot he court, contain terms of employment capable of being offered and accepted in the course of a religious ceremony. I have no doubt that on a proper consideration of the decision in Davies (supra), the courts of England would, given the circumstances of the present terms and conditions of employment of South African Clergy, most (if not all S.A. Clergy) are indeed employees for purposes of the Labour Relations Act, No.66 of 1995.

Closer to home, Mr Boda in NW126 the Arbitrator, referred to the judgement in Mankatshu v Old Apostolic Church of Africa and Other 1994 (2) SA 458. In this case the Appellate division of the Transkei refused to uphold the appeal of an non-stipendiary self-supporting priest following his removal from his position by the Apostolate of his church prior to his having being heard on the matter. The only reason why the court dismissed the appeal was its finding that the appellant had no civil rights or interests entitling him to be heard. The entitlement of an employee to a fair procedure prior to being dismissed is in any event entrenched and founded on the provisions of Schedule 8 of the Act, and is not based on any principles of the common law.

The new Labour Relations Act 66 of 1995 (the Act) provides protection for a range of employees and employers, unions and organisations with very few exclusions. The one common thread, however, is that the parties must enjoy an employment relationship before the provisions of the Act will be applicable. This raises the vexed question of the independent contractor who does not fulfill the requirement of being involved in an employment relationship and who, therefore, does not have access to the protections provided by the Act.

The Act makes provision for the Labour Court and the Commission for Conciliation, Mediation and Arbitration (CCMA) to have jurisdiction over disputes which arise between employees and employers (See Section 134 read with Section 135 and Section 2 13). An employment relationship is therefore prerequisite for the Labour Court or the CCMA to acquire jurisdiction over a dispute. It is thus imperative to enquire whether an applicant who applies for relief under the Act meets the definition of an employee or not.

The starting point of such an enquiry must logically be the definition provided in Section 213 of the Act:

"Employee means:
(a) any person, excluding an independent contractor, who works for another person or for the State and who receives, or is entitled to receive, any remuneration; and
(b) any other person who in any manner assists in carrying on or conducting the business of an employer."

The first part of the definition under Section 213 incorporates the common law concept of an employee. Under the common law an employee is someone who works under a contract of service (locatio conductio operarum) as opposed to a contract of services (locatio conductio operis). Persons working under a contract for services (independent contractors) are expressly excluded from the definition.

The second part of the definition is much wider than the first and even appears wide enough to include independent contractors who are not expressly excluded and many other persons not normally regarded as employees such as partners and agents. However, our courts have recognised the need when interpreting equivalent phraseology in the previous definition, to read some limitation into the wording. A failure to do so would lead to absurdity where attorneys or accountants or even suppliers of the employer could be said to be "assisting in the carrying on the client's business”.

Thus the courts distinguish between people "assisting in the carrying on or conducting of a business" who would be employees and those persons "performing work or services which have the effect of providing such assistance" who, as independent contractors, would fall outside the scope of the definition of employee.

In most cases the identification of persons as employees or independent contractors is relatively easy. The plumber I call out to fix a leaking tap, provides a service (or result) for a fee and is an independent contractor. The Secretary I hire on an indefinite period contract and pay a monthly salary to in return for her personal services during fixed working hours is an employee.

A CCMA arbitration, GA558, the arbitration was to decide whether the dismissal of two ministers (priests) was substantively and procedurally fair. The Arbitrator found in favour of the two pastors and ordered the Church to pay them 12 months compensation. In the review papers, which review the Church later withdrew, the Church argued that the Arbitrator applied commercial principles of employment law and fairness to a church which is obliged to apply the different standard of God's law and failed to give effect to the right and duty of a church to determine according to biblical principles who should hold leadership positions in the church.

The church's contention was supported by a number of scriptures from the Bible, which you are best suited to interpret, depicting the scriptural requirements for an individual who is a true Christian to comply with before being placed in a position of authority in the church, is that he should have a calling. Ladies and gentlemen, while the calling is determined by God, it is the function of the leadership of the church to structure the terms and conditions of employment between itself and the pastor. That nature of employment will determine whether a clergy is an employee or not as defined in the Act.

As Brassey tells us in his excellent article, The Nature of Employment (1990) 11 ILJ 889, when we have to establish if an individual 5 an employee or not, we arc looking for indications of a social relationship where one person is obliged to place his or her capacity to work at the disposal of another. This differs from an independent contractor who does not deliver a capacity to work but a finished product or completed result. Both the dominant impression test and the determination of Brassey's distinction depend to some extent on the evaluation of a range of factors. These factors include the following (in no particular order):

1. The contract itself which evidences the stated intention of the parties. The parties can be presumed to have worded their contract in such a way that it depicts the nature of the relationship they have chosen to utilise. This is, however, not necessarily determinative because parties may classify their relationship in a particular way for a variety of reasons, while the reality is that a completely different relationship exists. The courts are prepared to investigate the true nature and realities of the relationship and do not regard themselves as bound by what the parties have chosen to call it.
2. The entrepreneurial character of self-employment. This would take account of the American concept of the "economic realities test". He presents himself to the general public as an established business presence, has a number of clients and bears the risk of profit and loss as opposed to workers who are dependent on the entity for whom they perform personal services.
3. The individual's risk of profits and losses. This factor overlaps with the previous one to some extent. The employee is unlikely to invest money or resources into the business of his employer and to be financially liable should the business fail. The personal investment made by the individual in money and/or equipment would tend to point to an independent contractor. Profit sharing and profit driven bonuses are not, however, uncommon in employment relationships.
4. The personal nature of the services rendered. Where an individual provides personal service to another we can assume an employment relationship. While it is true an employment relationship would not be conceivable without the employee being obliged to render personal service, the converse is not necessarily true.
5. The way in which the individual is taxed. The Income Tax Act obliges an employer to deduct tax from the earnings of his employees but not from the payments made to independent contractors. Where a person is taxed at source by one of the employment taxation regimes such as PAYE or SITE we can presume that he is an employee whereas an independent contractor is usually responsible for his own tax liability.
6. The method and calculation of payment or remuneration. This too is a general guideline. The employee is usually paid a set determined salary on a weekly or monthly basis whereas the independent contractor would receive an agreed fee on the completion of a result or the rendering of a specific service.
7. The presence or absence of "typical" employment benefits. Generally only employers provide benefits such as pension fund, medical aid, paid leave, company insurance, etc. If an employer contributes to a benefit fund for the worker it would be an indication of an employment relationship. Likewise, paid annual or other types of leave would point to an employment relationship. The absence of some of these "employment benefits" however, would not necessarily mean that an employment relationship does not exist.
8. The extent to which the individual is obliged to work fixed hours and take leave at times suitable to the company. The working of fixed hours is by no means conclusive of an employment relationship bcc('use of the recent emergence of atypical employment relationships. An independent contractor would generally be able to work the hours he chooses and to take leave at his discretion.

In conclusion, it would appear to me, unless otherwise persuaded, that all the factors I have just spoken to, supports the contention that clergy are employees as contemplated in the Act. The legislation is deliberately silent on the definition of the employer. It follows that once an individual has been found to be an employee, whomsoever he is assisting is categorised as an employer. I trust that within the time constraints I have alluded to earlier, I have managed to give you some food for thought.