Church stops paying pastor's salary, argues fixed-term employment

The Employment Relations Authority recently dealt with a case involving a worker and his employer, a church trust board.

The worker claimed he was unjustifiably dismissed from his role as a full-time principal pastor, while the employer argued that he was a fixed-term employee whose employment had expired.

This case highlighted the complexities that can arise in employment relationships, particularly when there are conflicts among those in leadership positions.

The Authority had to navigate through several issues, including the validity of the worker's employment agreement, the nature of his employment, and the circumstances surrounding his alleged dismissal.

Workplace dispute

The worker had been employed as a salaried pastor since February 2015. In June 2020, he was appointed to the role of principal pastor, which was a permanent full-time position.

However, disputes arose among the church's trust board members, particularly regarding the use of a building owned by the church.

These conflicts affected the worker's employment relationship, with some board members allegedly spreading rumours that undermined his relationship with certain members of the congregation.

According to records, the root cause of these problems was traced back to the ongoing dispute over the building use.

Issues with worker's employment agreement

The worker's employment agreement contained a clause stating an end period for his role "from 2nd September 2019 to 31st March 2022."

However, the worker argued that there had been no mutual agreement about an end date for his employment. He said that an agreement had been prepared using a template, and the end date clause was never discussed with or brought to the worker's attention.

The Authority found that the employer failed to comply with the requirements of section 66 of the Employment Relations Act 2000. There was no genuine reason for using a fixed-term agreement, and the reason for the employment ending was not recorded in the document.

Alleged dismissal

On 20 April 2022, the employer decided to stop paying the worker's salary, claiming that his fixed-term employment had expired.

The worker argued that this amounted to a dismissal, as he was contractually entitled to be paid for the work he performed.

The Authority found that the employer failed to comply with its good faith obligations regarding the decision to stop paying the worker's salary. It said that he was not adequately consulted, provided with sufficient information, or given a proper opportunity to respond.

"According to the employment relations law, [the worker's] employment contract is still legal and valid," said one of the board members stated in a message to the others.

ERA: unjustifiable dismissal

The Authority concluded that the worker was a permanent employee who was unjustifiably dismissed. The employer failed to follow a fair process and breached its good faith obligations.

"The absence of a legitimate reason for dismissing [the worker] or of a fair and proper process, along with the breaches of good faith that occurred, fundamentally undermined the [employer's] ability to justify [the worker's] dismissal or alternatively, the unjustified disadvantage he suffered because he was not paid for the work he did," the Authority stated.

Consequently, the Authority ordered the employer to pay the worker lost remuneration for the work he performed but was not paid for, from 1 April 2022 onwards.

The worker was also reinstated to his permanent role, with the employment relationship to continue as it was prior to 31 March 2022.