The Court of Appeal upheld the Employment Tribunal and reversed the decision of the Employment Appeal Tribunal (EAT) in deciding that the appellant rector was not employed for the purposes of the provisions of the Employment Rights Act 1996 covering either whistle-blowing or unfair dismissal. The rector held freehold office that pre-dated Common Tenure. It was found that there was no express contract nor could one be implied from acceptance of the patron's offer letter or from the ‘bishop's papers’ with information about stipends, leave and other practical issues. In coming to their conclusions the Court reviewed recent legal developments relating to the employment status of ministers and concluded that the current legal position of ministers of religion depends on the facts of their specific tenure, terms and conditions. There is no longer a presumption that the spiritual nature of the role necessarily precludes a contract. A contract is not necessarily precluded by being an office-holder, nor by the fact that the office of rector is regulated by ecclesiastical law. In order to establish that there is a contract there needs to be clear evidence of parties to a contract and agreement of terms and conditions, in line with employment law as set out in Ready Mixed Concrete (South East Ltd) v Minister of Pensions and National Insurance [1968] 2 QB 497.

On the facts of this case the bishop was not a party to any contract; although he issued the licence, the offer letter was from the patron, and payment from the Church Commissioners. In addition, the bishop had the power neither to issue direct orders nor to terminate the appointment. The office of rector can be ended only in exceptional circumstances for doctrinal issues under the Ecclesiastical Jurisdiction Measure 1963 or the Clergy Discipline Measure 2003, under which a bishop can only respond to complaints rather than initiating proceedings. Evidence was accepted that the power to enforce the oath of canonical obedience was ‘toothless’. While the terms included in the ‘bishop's papers’ might have warranted further investigation in relation to the issue of whether they constituted terms and conditions in a contractual agreement, as suggested by the EAT, the Court of Appeal's decision precluded revisiting the point. It was recognised that the disparate nature of the Church of England's structures might risk the existence of a contract being frustrated by fragmentation but in the context of freehold tenure there were no other features of a contract that could be so frustrated.

In Mr Sharpe's case, as rector he agreed to follow his calling in accepting the cure of souls of his parishioners. He did not enter into an agreement to do work for the purposes and benefit of the Church as a commercial transaction. Rather, the Church provides the institutional structure in which the incumbent can follow his or her calling to be part of the ministry. This gives a freedom to exercise the role of the office that reflects the defining ethos of freedom for the Church set out in Magna Carta. [Catherine Shelley]