Building upon the legal framework established in Part 1, this section addresses the primary defence likely to be raised by the Diocese: that the priest holds a “spiritual office” and is not an employee. It explains how this historical argument has been legally dismantled by the High Court of Australia’s landmark decision in Ermogenous v Greek Orthodox Community of SA Inc.
The primary argument advanced by the Anglican Diocese will almost certainly be that the relationship with its priest is not one of employment but is of a unique, spiritual character. This argument is historically rooted in the common law concept of the “benefice” or ecclesiastical “office”.20 Traditionally, a priest’s appointment was seen not as the formation of a contract but as the conferral of a spiritual office with associated rights (like tenure and a stipend) and duties defined by ecclesiastical law, not civil contract law.21
To support this, courts historically applied a “presumption” that the parties to an arrangement concerning a minister of religion did not intend to create legally enforceable relations.22 The relationship was placed in the same category as domestic or social agreements, where legal consequences are not typically intended. It was viewed as a “consensual compact” based on shared faith, with obligations grounded in conscience rather than contract.20 This reasoning formed the basis of earlier decisions, such as
Reverend Howard Ian Knowles and The Anglican Property Trust, Diocese of Bathurst, where an Anglican minister was found to be engaged on a “spiritual basis” and therefore could not bring an unfair dismissal claim.22 The Diocese’s defence is an attempt to characterise the relationship as falling within this special, non-justiciable category, thereby excluding the jurisdiction of secular bodies like the FWC.
The traditional “spiritual office” defence was fundamentally dismantled by the High Court of Australia in its landmark 2002 decision in Ermogenous v Greek Orthodox Community of SA Inc HCA 8.22 This case represents not merely an incremental change but a profound shift in the legal approach to the status of clergy in Australia. The High Court unequivocally rejected the use of presumptions to determine whether a legal relationship exists.
The majority judgment stated that it was no longer appropriate to rely on a presumption that arrangements involving ministers of religion are not intended to create legal relations.22 The Court found that using such presumptions could “distract attention from that more basic and important proposition” of objectively determining the parties’ intentions.25 Instead of applying a starting assumption based on the subject matter, the High Court mandated that every case must be assessed on its own specific facts and circumstances.22 The central question became: on an objective assessment of the state of affairs between the parties, did they manifest an intention to create a legally binding relationship? This moved the analysis of religious appointments out of a protected, exceptional category and into the mainstream of Australian contract law. Any argument from the Diocese that rests on a simple assertion of a “spiritual relationship” is therefore legally anachronistic; it attempts to rely on a legal framework that the High Court decisively abolished over two decades ago.
Following Ermogenous, the determination of the relationship’s legal character requires an objective analysis of the available evidence.23 The uncommunicated, subjective intentions of the parties are irrelevant; what matters is what their words and, more importantly, their actions reveal about the nature of their agreement. When this objective test is applied to the priest’s situation, the evidence overwhelmingly points towards an intention to create a legally enforceable relationship with all the hallmarks of employment.
The most compelling objective facts are the Diocese’s own administrative and financial practices. The regular payment of a specified amount (the stipend), the withholding of PAYG tax in accordance with federal law, the payment of superannuation contributions as required by statute, and the provision of material benefits such as housing are not the actions of parties in a purely spiritual, non-legal compact.22 These are the concrete, tangible features of a remunerative, legally regulated working arrangement.
The Diocese cannot logically maintain two contradictory positions. It cannot, on the one hand, represent to the Australian Taxation Office and superannuation funds that the relationship is one of remuneration for services that requires compliance with employment-related statutes, and on the other hand, argue to the Fair Work Commission that the relationship is purely spiritual and devoid of legal effect. The use of ecclesiastical labels such as “stipend,” “benefice,” or “covenant” does not alter the objective substance of the relationship.16 The “practical reality” is that the priest provides labour and services under the direction and control of the Diocese in return for regular remuneration and other material benefits. This is the essence of an employment relationship, and the objective evidence demonstrates a clear intention from both parties to be bound by the legal and financial incidents of such a relationship.
The FWC has considered the employment status of clergy on several occasions since Ermogenous, with differing outcomes that provide a clear strategic roadmap. A comparative analysis of these cases reveals the critical factors that influence the Commission’s decisions.
Blueprint for Success – Solomon Woldeyohannes v Zion Church in Melbourne Australia Inc FWC 4194:
This decision stands as a powerful and favourable precedent. In Woldeyohannes, the FWC found that an assistant pastor was an employee and therefore able to pursue an unfair dismissal claim. 28 Deputy President Colman’s reasoning provides a clear blueprint for the present case. The key factors that led to the finding of employment were a combination of classic indicia:
A decisive structural factor in this case was that the church was an incorporated association under Victorian law.29 This meant there was a clearly identifiable legal entity with the capacity to enter into contracts and be an employer. The FWC concluded that, viewed objectively, the relationship bore all the marks of a legally binding contract of employment.23
Cautionary Tales – Rev Hedley Fihaki v Uniting Church in Australia, Qld Synod FWC 1650 & Steven Threadgill v Corporation of the Synod of the Diocese of Brisbane FWC 6277:
These cases, where the applicants were unsuccessful, highlight the arguments that must be overcome. In Fihaki, the FWC determined that a Uniting Church minister was in a “spiritual or covenantal relationship” and not an employee.1 The Commission’s decision rested on several key points:
The earlier case of Threadgill, which also involved the Anglican Diocese of Brisbane, was decided against the applicant on the basis that his role was “primarily or entirely religious in character” and his position was held under a “discretionary” license from the Archbishop, based on the internal canons of the church.23
The strategy for the priest’s claim must be to meticulously align the facts with the successful reasoning in Woldeyohannes while proactively dismantling the arguments that succeeded for the church in Fihaki and Threadgill.
First, the argument must mirror Woldeyohannes by emphasising the objective, practical indicia of employment: the long-term nature of the service, the regularity and consistency of remuneration (stipend), the provision of leave entitlements (as per documents like the “Ministry Unit Clergy Annual Leave Canon” 31), and, most significantly, the pervasive control exercised by the Diocese through its comprehensive regulatory framework.
Second, and most critically, the argument must neutralise the pitfalls identified in Fihaki. The single most important point of distinction is the legal structure of the Anglican Diocese of Southern Queensland. Unlike the unincorporated bodies in the Fihaki case, the Anglican Diocese operates through a specific, legally constituted corporate entity: “The Corporation of the Synod of the Diocese of Brisbane”.32 This body is established by Queensland statute, namely the Anglican Church of Australia (Diocese of Brisbane) Property Act 1889.33 As a body corporate, it has perpetual succession, a common seal, and is legally capable of suing and being sued, holding property, and, crucially, entering into contracts.33 This is the entity that almost certainly handles the financial administration of the Diocese, including the payment of stipends, tax, and superannuation. By naming this specific corporate body as the respondent employer, the argument that there is no legal person capable of forming an employment contract—a cornerstone of the Fihaki decision—is completely nullified.
Finally, any contractual disclaimer in a “Letter of Call” must be challenged directly under the new Closing Loopholes framework. While such a label was given weight in Fihaki, the FWC is now statutorily obliged to look past it to the “practical reality” of the relationship. The argument is that the Diocese’s own conduct—treating the priest as an employee for tax, superannuation, and disciplinary purposes—overwhelms and contradicts any self-serving label it may have placed in a document. The substance of the relationship, as demonstrated by years of practice, must prevail over its form.
One of the most persuasive lines of argument stems from the Diocese’s own conduct in complying with various Commonwealth statutes that are predicated on the existence of an employment or employment-like relationship. This conduct serves as a powerful objective indicator of the “real substance” of the arrangement, effectively contradicting the claim of a purely spiritual, non-legal compact.
The Australian Taxation Office (ATO) has provided clear guidance on the treatment of ministers of religion for taxation purposes. ATO Taxation Ruling TR 92/17, which deals with the provision of fringe benefits by religious institutions, is particularly instructive.35 Paragraph 15 of this ruling makes an explicit and unequivocal statement regarding the status of remunerated clergy for the purposes of the Fringe Benefits Tax Assessment Act 1986 (FBTAA):
“Religious practitioners who receive a stipend or other form of remuneration (including non-cash benefits) are employees for the purposes of the FBTAA…”.35
While this definition is specific to the FBTAA, its significance cannot be overstated. It demonstrates that for the purposes of a major and complex piece of Commonwealth taxation law, the relationship between a church and its remunerated clergy is defined as one of employment. The Diocese, in managing its FBT obligations, operates under this statutory definition.
Furthermore, the ATO’s requirements for PAYG withholding from payments made to “religious practitioners” confirm this treatment.36 The system of withholding tax from salary and wages is a cornerstone of the employer-employee relationship in Australia. The fact that the Diocese deducts PAYG tax from the priest’s stipend, as it is legally required to do, is a practical acknowledgement that the payment is akin to salary or wages paid to an employee.17
The payment of superannuation contributions by the Diocese is not merely an act of pastoral goodwill; it is a response to a legal obligation under the Superannuation Guarantee (Administration) Act 1992 (Cth). This Act mandates that employers make superannuation contributions for their eligible employees. The definition of “employee” for superannuation purposes is broader than the ordinary common law meaning and is specifically designed to cover a wide range of working relationships. It often extends to capture individuals who might otherwise be considered office-holders or contractors if they are paid wholly or principally for their labour.
The fact that the Diocese makes these compulsory contributions is a powerful piece of evidence. It shows that the Diocese has assessed its legal obligations under this separate statutory scheme and concluded that the relationship with its priest falls within the definition of employment for superannuation purposes. Diocesan documents from various regions confirm the practice of paying superannuation and long service leave contributions as part of the overall clergy remuneration package.18
Synthesising these points creates a compelling argument based on the Diocese’s contradictory positions. The Diocese voluntarily, deliberately, and consistently organises its financial affairs to comply with Commonwealth taxation and superannuation legislation. This compliance is predicated on the relationship with its priest having the essential characteristics of employment. The Diocese represents to the ATO that the priest is a person to whom payments are made that are subject to PAYG withholding. It represents to its superannuation fund that the priest is an employee for whom superannuation guarantee contributions are mandatory.
It is therefore legally and logically inconsistent for the Diocese to adopt this characterisation for the purposes of its statutory financial obligations, only to disavow it when faced with its statutory obligations under the Fair Work Act 2009. This conduct is a critical part of the “practical reality and true nature of the relationship.” It reveals that the Diocese itself, through its own administrative actions, treats the priest as an employee when it is legally compelled to do so. The assertion before the FWC that the relationship is purely spiritual and non-legal is a self-serving re-characterisation designed to avoid one specific set of legal obligations (unfair dismissal) while accepting others (tax and superannuation). This contradiction fundamentally undermines the credibility of the “spiritual office” defence and provides strong evidence that the substantive reality of the relationship is one of employment.
The objective evidence of tax and superannuation payments fundamentally undermines the spiritual office defence and provides a clear pathway to establishing an employment relationship. To conclude the analysis, look out for Part 3 to learn how the Diocese’s own internal rules function as a blueprint for an employment relationship.
Establishing Employment Status for an Anglican Priest in Queensland: A Legal Analysis for an Unfair Dismissal Claim – Part 3
