This section begins by exploring the legal foundations for an Anglican priest’s unfair dismissal claim in Queensland, Australia. It outlines how the Fair Work Act 2009 grants statutory rights to “employees” and details the recent Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024. This pivotal amendment, which introduces a new statutory definition of an ’employee’, is the key to establishing a working relationship based on its “real substance, practical reality and true nature” rather than just a written contract.
The ability for an individual in Australia to seek a remedy for unfair dismissal is a statutory right granted by the Fair Work Act 2009 (Cth) (‘the Act’). This right is not universal; it is specifically reserved for individuals who meet the definition of a “person protected from unfair dismissal.” The foundational requirement, as stipulated in section 382 of the Act, is that the person must have been an “employee” who has completed the minimum employment period.1 Consequently, the determination of a worker’s status as an employee is the jurisdictional gateway to accessing the protections and remedies offered by the Fair Work Commission (FWC). If a person is not found to be an employee, the FWC has no jurisdiction to hear the merits of their dismissal claim, regardless of how unjust or unreasonable the termination may have been.
Historically, the Act and its predecessors did not provide a comprehensive statutory definition of an “employee”.2 This legislative silence meant that courts and tribunals were required to turn to the common law to distinguish between an employee (engaged under a contract of service) and an independent contractor (engaged under a contract for services). This reliance on a body of evolving case law created a landscape of considerable legal complexity and uncertainty, particularly for workers in non-traditional arrangements, including ministers of religion. The Anglican Diocese’s challenge to the priest’s claim is a classic example of such a jurisdictional objection, aiming to close this gateway before the substantive issues of the dismissal can be examined. The entire case, therefore, hinges on successfully establishing that the relationship between the priest and the Diocese was, in law, one of employment.
A pivotal and highly advantageous development for the priest’s claim is the recent amendment to the Fair Work Act 2009 through the Fair Work Legislation Amendment (Closing Loopholes No. 2) Act 2024 (‘the CL No. 2 Act’). Commencing on 26 August 2024, these amendments introduce a new statutory definition of “employee” and “employer” for the purposes of the Act.2 This new definition applies to all working relationships that were entered into before this date and continue to be on foot, as well as any new arrangements.2
The new section 15AA of the Act fundamentally alters the analytical framework. It mandates that the question of whether an individual is an employee is to be determined by ascertaining the “real substance, practical reality and true nature of the relationship” between the parties.2 This requires a comprehensive examination of the “totality of the relationship,” which explicitly includes not only the terms of the contract governing the relationship but also, crucially, the manner in which the contract is performed in practice.4
This legislative intervention is of profound strategic importance because it directly and deliberately overturns the restrictive, contract-centric approach established by the High Court of Australia in its 2022 decisions of CFMMEU v Personnel Contracting Pty Ltd HCA 1 and ZG Operations Australia Pty Ltd v Jamsek HCA 2.3 In those cases, the High Court held that where a comprehensive written contract existed and was not a sham, the character of the relationship was to be determined primarily by reference to the legal rights and obligations established by the terms of that contract, with the subsequent conduct of the parties being largely irrelevant.6 The Diocese would likely seek to rely on this precedent, arguing that a “Letter of Call” or similar ecclesiastical document, which may label the relationship as spiritual and non-contractual, should be determinative.
Closing Loopholes amendments render such an argument significantly less potent, if not entirely obsolete, for matters under the Act. The FWC is now statutorily compelled to look beyond the labels and legal drafting to the lived reality of the working arrangement. This shifts the focus from a narrow, and often artificial, contractual analysis to a holistic and practical one, which is far more favourable terrain for establishing an employment relationship based on the day-to-day realities of the priest’s work and the control exercised by the Diocese.
The introduction of the “real substance, practical reality and true nature” test effectively reinstates and enshrines in legislation the long-standing common law “multi-factorial” or “multi-indicia” test.4 For decades prior to the Personnel Contracting and Jamsek decisions, this was the orthodox method used by Australian courts to determine employment status. The core objective of this test is to paint a complete picture of the working relationship to determine, as a matter of practical reality, whether the worker is serving in the business of the engaging entity (as an employee) or is in fact operating their own business or enterprise.6
The multi-factorial test involves identifying and weighing a range of relevant indicia. While the list of factors is not exhaustive and their relative importance can vary depending on the specific circumstances, several key indicators have been consistently considered by the courts. These include:
A fundamental principle of the multi-factorial test is that no single factor is, on its own, determinative.5 For instance, the fact that a worker has an ABN or issues invoices does not automatically make them an independent contractor.5 Similarly, the labels used by the parties in their contract to describe the relationship are relevant but not conclusive.7 The FWC is required to consider the totality of the relationship, weighing all the relevant factors to form a balanced and practical judgment about where the relationship truly lies on the spectrum between employment and independent contracting.10 This approach, now mandated by the Act, allows for a nuanced and fact-sensitive inquiry that prioritises the substantive reality of the arrangement over its formal presentation.
When the multi-factorial test is applied to the typical working relationship of an Anglican priest within a Diocese, the balance of indicia weighs heavily in favour of an employment relationship. The “practical reality” is one of significant organisational control and integration, not that of an independent spiritual practitioner running their own enterprise.
Control: The degree of control exercised by the Diocese over its priests is arguably the most compelling indicator of employment. While an independent contractor retains the right to choose how, where, and when they perform their work, subject only to the terms of the contract, a priest is subject to a comprehensive and hierarchical system of control.6 This control is not merely spiritual but extends to practical, administrative, and disciplinary matters. The Diocese’s own governance documents provide extensive evidence of this control. For example, the ‘Clergy Complaints and Performance Protocol’ for the Anglican Church Southern Queensland details formal processes for managing performance, initiating investigations, creating “Performance Improvement Plans,” and making recommendations to the Archbishop for disciplinary action, including the revocation of a priest’s license to officiate.12 This mirrors the performance management and disciplinary procedures found in any large organisation. Similarly, Diocesan documents like the ‘Clergy Discipline Ordinance’ establish a formal tribunal system for a wide range of “offences,” including “habitual or wilful neglect of ministerial duty”.13 The power of the Bishop to suspend a priest from their duties is a clear exercise of employer-like authority.13 Furthermore, a priest is bound to adhere to the doctrine, discipline, and worship of the Anglican Church as prescribed in its Constitution and Canons, representing a fundamental level of control over the core functions of their role.14
Integration: An employee works as part of the employer’s business, whereas an independent contractor provides services to the business.6 An Anglican priest is not an external consultant to the Diocese; they are the local embodiment and operator of the Diocese’s core mission. They perform the central functions of the church—leading worship, providing pastoral care, administering sacraments, and teaching the faith. They are presented to the public and the congregation as a representative of the Anglican Church, operating from church property and using the church’s name and branding. This high level of integration into the organisational structure, mission, and public identity of the Diocese is a strong hallmark of an employment relationship.
Remuneration: The financial arrangements between the priest and the Diocese are highly indicative of employment. The priest receives a regular, periodic payment, whether it is labelled a “stipend” or a “salary”.16 Crucially, the Diocese withholds Pay As You Go (PAYG) tax from this payment and remits it to the Australian Taxation Office (ATO), and it makes compulsory superannuation contributions on the priest’s behalf.17 These actions—the deduction of income tax and payment of superannuation—are statutory obligations imposed on employers for their employees. They are not features of a relationship with an independent contractor, who is responsible for their own tax and superannuation affairs. The provision of payslips, sometimes detailing an hourly rate as seen in the Fihaki case, further solidifies the character of these payments as remuneration for work performed, not a gratuitous living allowance.16
Personal Service / Inability to Delegate: A defining feature of an employment contract (a contract of service) is that the employee must perform the work personally.6 A priest cannot delegate or subcontract their core ecclesiastical and pastoral duties. The roles of celebrating the Eucharist, preaching, baptising, and providing personal pastoral care are inherently tied to the individual ordained person and their license from the Bishop. This inability to delegate the work to another person is a strong indicator that the contract is for the personal service of the priest, which is characteristic of employment.
Risk and Equipment: An independent contractor typically bears the commercial and financial risk of their enterprise and makes a capital investment in the tools and equipment required to perform the work.5 An Anglican priest bears no such risk. The Diocese and/or the local parish entity owns the primary assets, including the church building, the hall, and the rectory in which the priest is housed. The Diocese is responsible for major maintenance, insurance, and the significant public liability risks associated with operating a parish. The priest does not stand to make a profit or a loss from their activities in the conventional business sense. The “tools of the trade”—from the physical place of worship to liturgical items and administrative support systems—are provided by the church. The priest is not investing capital to run a business; they are being provided with the necessary resources to perform their duties within the Diocese’s larger enterprise.
The following table synthesises the application of the multi-factorial test, visually demonstrating how the practical realities of a priest’s role align with the characteristics of an employee rather than an independent contractor.
| Indicia of Relationship | Characteristics of an Employee | Characteristics of an Independent Contractor | Application to Anglican Priest’s Role |
| Control | High degree of control by employer over how, when, and where work is done. Subject to direction and discipline. | High degree of control by worker over how, when, and where work is done. Works to achieve a specified result. | High degree of Diocesan control is exercised via the Bishop’s license, binding Canons, formal disciplinary ordinances, and performance management protocols.12 |
| Integration | Works within and is an integral part of the employer’s business. Presented to the public as part of the organisation. | Provides services to the business; operates their own separate business, often servicing multiple clients. | Fully integrated. The priest is the public face and core operator of the Diocese’s mission at the parish level, performing its essential functions.6 |
| Remuneration | Receives a regular wage or salary. PAYG tax is withheld by the employer. Superannuation is paid by the employer. | Paid for a result, typically upon invoicing. Manages their own tax and superannuation obligations. | Strongly indicative of employment. Receives a regular stipend, from which PAYG tax is withheld. Compulsory superannuation is paid by the Diocese.17 |
| Delegation | Must perform the work personally. Cannot delegate or subcontract core duties to another person. | Can delegate or subcontract work to others to achieve the contracted result. | Cannot delegate. Core liturgical, sacramental, and pastoral duties are personal to the ordained priest and cannot be subcontracted.6 |
| Risk | Bears little to no commercial or financial risk. The employer is liable for costs and defects. | Bears the commercial risk for profit or loss, the cost of rectifying defective work, and public liability. | Diocese bears risk. The Diocese holds the assets, insurance, and ultimate financial and legal liability for the parish’s operations.6 |
| Tools & Equipment | The employer provides the necessary tools, equipment, and place of work. | The worker provides their own tools and equipment, often making a significant capital investment. | Diocese provides tools. The church building, rectory (housing), office facilities, and liturgical items are all provided by the Diocese.5 |
This legislative change is of profound strategic importance, shifting the focus from a narrow contractual analysis to a holistic and practical one that is more favourable for establishing an employment relationship.
Look out for Part 2, where we’ll discover how the ‘spiritual office’ defence is challenged in court.
Establishing Employment Status for an Anglican Priest in Queensland: A Legal Analysis for an Unfair Dismissal Claim – Part 2
