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Is a student engaged in full time religious studies, but being paid an 'allowance' by a church, considered an employee for the purposes of the Superannuation Guarantee (Administration) Act 1992 (SGAA)?

No. There is no employment relationship between the student and religious entity for the purposes of the SGAA.

A religious entity offers a three year full time course of study, plus an allowance, to students. The allowance paid has tax remitted as income by the religious entity. In the second and third year a student would undertake preparatory pastoral activities, occupying up to fifteen percent of the student's time. No formal written or oral contract exists between the parties to the arrangement detailing the obligations or requirements in relation to either party.

The SGAA requires employers to provide superannuation benefits for their employees. There is no requirement to provide superannuation if there is no employer and employee relationship. Section 12 of the SGAA defines an 'employee' as having its ordinary meaning (although it also expands or clarifies the meaning in a limited range of circumstances). The ordinary meaning is determined by reference to case law.

Although the student performs practical work in the second and third years of study, it is considered that the work undertaken appears only to constitute training and not the entering into a contract of employment to receive remuneration for the work done. The allowance paid is purely to assist the student in their training.

There is also a line of cases which suggest that work done by ministers of religion is not work done in the service of a church, but rather in the service of God, indicating there is no contractual relationship with the church for the purposes of the SGAA (Rogers v Booth [1937] 2 All ER 751; Davies v Presbyterian Church of Wales [1986] 1WLR 323 and President of the Methodist Conference v Parfitt [1984] QB 368).

In this case, there is an agreement whereby the church undertakes to provide a course of study, that will enable a student to become part of the ministry There will be no legal implications and no attempt to recover moneys outlaid in the event that the student does not complete, or fails the course, or decides on completion that she or he does not wish to enter the ministry.