This chapter will acquaint you with the legal principles that apply to the three phases of a minister's relationship with a local church: (1) initiation of the relationship; (2) terms and conditions of the employment relationship, including the employment contract and compensation; and (3) termination of the relationship.
Initiation of the pastor-church relationship varies from denomination to denomination and even from church to church within some denominations. Hierarchical denominations may exercise considerable control over local churches, and prescribe how a minister is selected.
In congregational denominations, the local church is self-governing and has the authority to select its own ministers. This authority must be exercised in accordance with the church's constitution and bylaws. This is a very important principle of law, and it indicates the necessity of being familiar with a church's governing documents. Sometimes clergy are asked to sign a contract of employment with their employing church. Such a contract generally will govern most aspects of the employment relationship. In most cases, however, no formal contract is ever signed. But in such cases the courts may "imply" a contract of employment once a minister begins performing duties on behalf of a church. The employment contract, whether actual or implied, gives the minister important legal rights.
A minister is legally entitled to receive the compensation specified in an employment contract. If no written contract exists, the minister is entitled to reasonable compensation for services rendered. In either case, the compensation received must not be unreasonably high, or the tax-exempt status of the church will be jeopardized.
The termination of the pastor-church relationship is regarded by the courts as an internal church matter over which they have no jurisdiction. A few courts have been willing to address collateral issues associated with a minister’s termination so long as no recourse to church doctrine or polity is required.