Bread of Life Christian Church in Auckland v Chen

Bread of Life Christian Church in Auckland experienced a significant internal split among its trustees, resulting in a dispute over the employment of Pastor Xi (Robert) Chen. Pastor Chen had served the church since 2015, most recently on a fixed-term contract. After his term ended, three trustees decided to suspend his salary, effectively ending his employment, while the other trustees objected.

Pastor Chen, excluded from the decision due to a conflict of interest, considered himself dismissed and brought a claim for unjustified dismissal.

The Employment Relations Authority found in his favour, ordering his reinstatement. However, after being reinstated, Pastor Chen was dismissed again, prompting further legal action. The Employment Court was tasked with deciding whether Pastor Chen was an employee, if he was unjustifiably dismissed, and what remedies should apply. The case highlights the challenges that can arise when governance is divided and employment processes are not properly followed.

The Employment Court found that Pastor Chen was an employee of the trust, not just a spiritual leader or volunteer. The Court examined the substance of the relationship, including the fixed-term agreement, regular salary payments, and the trust’s control over his work. The Court held that the trust unjustifiably dismissed Pastor Chen both in April 2022 and again in April 2024, as the trustees failed to follow a fair and proper process.

The Court ordered the trust to pay Pastor Chen lost remuneration, reinstate him to the payroll, and work with the Mother Church to ensure his full reinstatement. The judgment emphasised that employment law applies to faith-based organisations and that proper process must be followed, even where governance is divided or there are internal disputes.

This case confirms that religious and charitable organisations are not exempt from employment law. If a person is engaged under an employment-like arrangement - such as a contract, regular pay, and clear duties - they are likely to be considered an employee, regardless of the organisation’s spiritual or volunteer-driven nature.

Boards and trustees must be aware that employment law obligations apply, including the need for fair process, good faith, and proper documentation. Disputes about governance or doctrine do not override employment rights. For example, even if trustees disagree about the direction of the organisation, they must still follow legal requirements when making decisions about employment.

Fixed-term contracts can be useful for both employers and employees, but they must be genuine and managed carefully. In this case, Pastor Chen’s fixed-term agreement ended, but the trust’s actions after the term - suspending salary without proper process - led to a finding of unjustified dismissal.

Employers must ensure that fixed-term contracts have a clear end date and reason, and that any decision not to renew or to end the relationship is handled with proper notice and consultation. Simply stopping payment or excluding the employee from decisions is not enough. For instance, if a fixed-term employee’s contract is ending, the employer should meet with the employee, explain the reasons, and allow them to respond before making any final decision.

New Zealand law requires employers to follow a fair process before dismissing any employee. This includes consulting all relevant decision-makers, giving the employee a chance to respond, and making decisions in good faith. In this case, the trustees’ failure to consult all board members and to follow proper process led to a finding of unjustified dismissal.

Even where there is internal conflict or a split board, the legal requirements do not change. Skipping steps or making unilateral decisions exposes the organisation to legal risk. For example, if a board is divided, it should still ensure all trustees are involved in the process and that the employee is given a fair opportunity to be heard.

The Employment Court can order a range of remedies for unjustified dismissal, including reinstatement, lost wages, and compensation. In this case, Pastor Chen was reinstated to the payroll and his former position, and the trust was ordered to pay lost remuneration. The Court also encouraged the parties to work with the Mother Church and consider mediation to resolve ongoing issues.

Employers should be aware that failing to follow proper process can result in costly and disruptive remedies, including the return of dismissed staff and back pay. For example, if an employee is dismissed without fair process, the Court may order their reinstatement and require the employer to pay all lost wages from the date of dismissal.