INTRODUCTION
The Elder Board of Disciples Church Springfield has approved the use of the Ministerial Remuneration Guidelines produced by the Baptist Union of Queensland as the appropriate "industry standard" for the payment of pastors employed by Disciples Church. A summary of these guidelines, for the 2021-22 financial year, is outlined below...
PREPARING A REMUNERATION PACKAGE
The following Guidelines and Procedures are provided for the assistance of Churches and Ministers to set an acceptable basis for negotiation between Registered Ministers and Churches as part of the Pastoral Call process.
All matters relating to a Minister’s Call are based on mutual agreement and trust with both parties seeking to know both God’s will in the situation and that the other is satisfied with the arrangements.
THE REMUNERATION BENCHMARK
The Remuneration Benchmark is normally derived by increasing the previous year’s benchmark by a factor calculated by taking the average of the Australian Average Weekly Earnings - Private Sector Ordinary Time Earnings and the All Groups Consumer Price Index - weighted average of all eight capital cities. Both indices are released by the Australian Bureau of Statistics from time to time and are published on its web site.
The guideline rate is recommended for a Registered Minister who has completed all of the study and experience requirements for Ordination or equivalent and is serving full time in a constituent church of Queensland Baptists. It should be applied irrespective of whether ordination has actually taken place.
Remuneration Benchmark @ 1st July 2022: $1,637.62 (per week)
ADJUSTMENTS TO THE REMUNERATION BENCHMARK
1. Senior Minister – Registered & Ordained Add 10%
Registered Ministers who have been ordained (or equivalent) for 10 years or more, or who have a responsibility for the other pastoral team members (such as Associate Pastors or other pastoral staff). This figure recognises the increased responsibility involved in supervising pastoral staff and/or additional experience gained from years of service.
2. Registered Minister Unordained Reduction 15%
Registered Ministers (as registered by QB’s Ministerial Services Committee) in the early part of their ministry and prior to them completing a level of study that would enable them to be considered for ordination.
3. Accommodation Reduction $285 per week
The provision for housing is a matter of careful and mutually respectful negotiation between the Pastor and the Church. The intent of these guidelines for Senior/Solo Pastors is that the Church is responsible for providing suitable accommodation for the Pastor’s family and the total remuneration paid is reduced by the above amount.
It should be noted that the figure identified above represents around 75% of the average housing cost across Queensland, and that housing costs vary significantly from place to place. The local cost of housing should be considered as to whether the Accommodation Reduction ought to be varied to align with local costs.
The application of the reduction may be achieved in a number of ways:
(a) If the Church owns suitable accommodation (a manse): The Pastor uses the manse and the Accommodation Reduction is deducted from the Remuneration Benchmark.
(b) If the Church does not own suitable accommodation but agrees to rent something suitable: This can be implemented in two ways;
- the church could rent the premises in its name and pay for it directly, and may deduct the accommodation reduction from the Remuneration Benchmark.
- the Pastor can rent a suitable property in his/her name, no accommodation reduction is applied, but the church pays additional exempt benefit equivalent to the total rental less the Accommodation Reduction. For example; if the rental was $350 per week paid by the pastor, the church should pay the pastor a full remuneration plus an additional exempt benefit of $65 per week. (350-285=65)
(c) If the Church does not own a manse or the manse is not suitable for the pastor, AND the Pastor owns or is willing to purchase a house: Generally, the Accommodation Reduction is simply not applied and housing is left to be the Pastor’s concern. However, if the Church is able to lease the manse to alternate tenants or make other savings by not needing to provide accommodation, an agreed additional contribution may be made to the Pastor to assist with mortgage repayments. For example, the contribution could be determined as half of the net benefit the church is receiving.
(d) If the Church owns suitable accommodation but the pastor elects to reside elsewhere:
This can be a complex scenario, and needs to be negotiated in good faith between the church and pastor as a part of the calling process. Guidelines for the negotiation process ought to include that the church is not significantly worse off compared to option (a), but that the Pastor’s reasons for not wishing to use the Church’s accommodation are declared and respected.
UPDATES TO THE REMUNERATION BENCHMARK
The Remuneration Benchmark figure is updated in May of each year to take effect from 1st July.
The method of calculating the benchmark increase is the average of CPI and AWE:
Benchmark Increase = (AWE + CPI) / 2 where:
AWE: The Average Weekly Earnings Index published by the Australian Bureau of Statistics. The series utilised is known as the “national trend private sector full time adult average weekly ordinary time earnings” and is reviewed six-monthly.
CPI: The Consumer Price Index published by the Australian Bureau of Statistics. The series utilised is known as the “weighted average of eight capital cities – All Groups”. This is the figure that generally headlines media coverage of inflation rates and therefore is widely recognisable.
Basis of this update’s rate calculation: This year’s update is based on the AWE update of February 2021 based on data effective Nov 2020, and the CPI update of March Quarter 2021 data published in April 2021. The AWE is 3.2% and CPI is 1.1%, giving a benchmark increase of 2.15%.
EXEMPT FRINGE BENEFITS
Registered Pastors working at Queensland Baptist churches are deemed to be a “Religious Practitioner” as defined in subsection 136(1) of the Fringe Benefit Taxation Act Australia. Queensland Baptists recommends that eligible pastors are paid as:
50% cash (taxable) component and 50% exempt fringe benefits.
Exempt Fringe Benefits may be used for any incurred personal expenses of the pastor, but not taken in cash. Historically lists of “eligible” uses have been published, but there is no legal restriction on the use of exempt benefits. However, in stressing that the benefit cannot be taken in cash, this includes payments to accounts where the pastor has the ability to draw down that benefit as cash – such as a line of credit on a home loan, or cash advances on a credit card. This is difficult to enforce in a failsafe manner, but an understanding of the legal requirement and a commitment to comply ought to be sought.
In instances where a pastor is remunerated on a part-time basis, it does not contravene these guidelines to receive more than 50% of that remuneration as exempt fringe benefits, providing the total fringe benefits is not more than 50% of a fulltime stipend.
EXPENSES
Where a pastor incurs expenses on behalf of the church, they are eligible for reimbursement following the same methodology as would be applied to members of the congregation. Examples would include travel to church-authorised events, and purchasing of supplies for the church office or kitchen.
SUPERANNUATION
An adjustment to the superannuation guarantee rate is due effective 1st July 2021. The new rate is 10.0%.
Superannuation contributions are to be calculated on total remuneration in compliance with the Superannuation Guarantee Rate and paid into the Pastor’s nominated fund.
Due to the Exempt Fringe Benefit issue, calculation of this amount for pastors is subject to interpretation. QB recommends that the contribution of the equivalent of 10.0% of the full Remuneration Guideline amount.
Accordingly, the Disciples Church Elder Board has determined that for our pastors, Super will be paid at the rate of 2 x Guarantee Rate x Stipend.
Additional Employee Contributions
A pastor may wish to make additional contributions to their superannuation fund and churches are encouraged to support them by facilitating this process as required. Professional advice ought to be sought by the pastor as to how to handle this issue.
DOCUMENTING REMUNERATION, TERMS AND CONDITIONS
It is recommended that a Pastoral appointment ought to include provision for the following:
PROCESSING MINISTERIAL EXEMPT FRINGE BENEFITS:
There are many ways in which exempt fringe benefits can be handled between the Church Treasurer and Pastor, and which one works better in each instance will vary. The option chosen by Disciples Church Springfield is as follows:
The pastor self-manages the use of their benefits and must keep records in case of an audit. This enables the pastor to use their benefit in their own way without the need for disclosure to any other party, but does place an administrative burden on the pastor.
1. The amount determined for Exempt Fringe Benefits is paid into a bank account that the Pastor is a signatory to. The account ideally ought to include the name of the church as well, as the balance is “officially” church money until spent.
2. The Pastor (or a nominated person – such as a spouse) may spend from this account as they choose to.
3. As the Church Treasurer has limited control of the account, the Pastor is responsible for ensuring all records are maintained to provide them if there was an audit announced.
4. As the Church Treasurer has no tax invoices, the GST cannot be claimed on expenditure.
The Elder Board of Disciples Church Springfield has approved the use of the Ministerial Remuneration Guidelines produced by the Baptist Union of Queensland as the appropriate "industry standard" for the payment of pastors employed by Disciples Church. A summary of these guidelines, for the 2021-22 financial year, is outlined below...
PREPARING A REMUNERATION PACKAGE
The following Guidelines and Procedures are provided for the assistance of Churches and Ministers to set an acceptable basis for negotiation between Registered Ministers and Churches as part of the Pastoral Call process.
All matters relating to a Minister’s Call are based on mutual agreement and trust with both parties seeking to know both God’s will in the situation and that the other is satisfied with the arrangements.
THE REMUNERATION BENCHMARK
The Remuneration Benchmark is normally derived by increasing the previous year’s benchmark by a factor calculated by taking the average of the Australian Average Weekly Earnings - Private Sector Ordinary Time Earnings and the All Groups Consumer Price Index - weighted average of all eight capital cities. Both indices are released by the Australian Bureau of Statistics from time to time and are published on its web site.
The guideline rate is recommended for a Registered Minister who has completed all of the study and experience requirements for Ordination or equivalent and is serving full time in a constituent church of Queensland Baptists. It should be applied irrespective of whether ordination has actually taken place.
Remuneration Benchmark @ 1st July 2022: $1,637.62 (per week)
ADJUSTMENTS TO THE REMUNERATION BENCHMARK
1. Senior Minister – Registered & Ordained Add 10%
Registered Ministers who have been ordained (or equivalent) for 10 years or more, or who have a responsibility for the other pastoral team members (such as Associate Pastors or other pastoral staff). This figure recognises the increased responsibility involved in supervising pastoral staff and/or additional experience gained from years of service.
2. Registered Minister Unordained Reduction 15%
Registered Ministers (as registered by QB’s Ministerial Services Committee) in the early part of their ministry and prior to them completing a level of study that would enable them to be considered for ordination.
3. Accommodation Reduction $285 per week
The provision for housing is a matter of careful and mutually respectful negotiation between the Pastor and the Church. The intent of these guidelines for Senior/Solo Pastors is that the Church is responsible for providing suitable accommodation for the Pastor’s family and the total remuneration paid is reduced by the above amount.
It should be noted that the figure identified above represents around 75% of the average housing cost across Queensland, and that housing costs vary significantly from place to place. The local cost of housing should be considered as to whether the Accommodation Reduction ought to be varied to align with local costs.
The application of the reduction may be achieved in a number of ways:
(a) If the Church owns suitable accommodation (a manse): The Pastor uses the manse and the Accommodation Reduction is deducted from the Remuneration Benchmark.
(b) If the Church does not own suitable accommodation but agrees to rent something suitable: This can be implemented in two ways;
- the church could rent the premises in its name and pay for it directly, and may deduct the accommodation reduction from the Remuneration Benchmark.
- the Pastor can rent a suitable property in his/her name, no accommodation reduction is applied, but the church pays additional exempt benefit equivalent to the total rental less the Accommodation Reduction. For example; if the rental was $350 per week paid by the pastor, the church should pay the pastor a full remuneration plus an additional exempt benefit of $65 per week. (350-285=65)
(c) If the Church does not own a manse or the manse is not suitable for the pastor, AND the Pastor owns or is willing to purchase a house: Generally, the Accommodation Reduction is simply not applied and housing is left to be the Pastor’s concern. However, if the Church is able to lease the manse to alternate tenants or make other savings by not needing to provide accommodation, an agreed additional contribution may be made to the Pastor to assist with mortgage repayments. For example, the contribution could be determined as half of the net benefit the church is receiving.
(d) If the Church owns suitable accommodation but the pastor elects to reside elsewhere:
This can be a complex scenario, and needs to be negotiated in good faith between the church and pastor as a part of the calling process. Guidelines for the negotiation process ought to include that the church is not significantly worse off compared to option (a), but that the Pastor’s reasons for not wishing to use the Church’s accommodation are declared and respected.
UPDATES TO THE REMUNERATION BENCHMARK
The Remuneration Benchmark figure is updated in May of each year to take effect from 1st July.
The method of calculating the benchmark increase is the average of CPI and AWE:
Benchmark Increase = (AWE + CPI) / 2 where:
AWE: The Average Weekly Earnings Index published by the Australian Bureau of Statistics. The series utilised is known as the “national trend private sector full time adult average weekly ordinary time earnings” and is reviewed six-monthly.
CPI: The Consumer Price Index published by the Australian Bureau of Statistics. The series utilised is known as the “weighted average of eight capital cities – All Groups”. This is the figure that generally headlines media coverage of inflation rates and therefore is widely recognisable.
Basis of this update’s rate calculation: This year’s update is based on the AWE update of February 2021 based on data effective Nov 2020, and the CPI update of March Quarter 2021 data published in April 2021. The AWE is 3.2% and CPI is 1.1%, giving a benchmark increase of 2.15%.
EXEMPT FRINGE BENEFITS
Registered Pastors working at Queensland Baptist churches are deemed to be a “Religious Practitioner” as defined in subsection 136(1) of the Fringe Benefit Taxation Act Australia. Queensland Baptists recommends that eligible pastors are paid as:
50% cash (taxable) component and 50% exempt fringe benefits.
Exempt Fringe Benefits may be used for any incurred personal expenses of the pastor, but not taken in cash. Historically lists of “eligible” uses have been published, but there is no legal restriction on the use of exempt benefits. However, in stressing that the benefit cannot be taken in cash, this includes payments to accounts where the pastor has the ability to draw down that benefit as cash – such as a line of credit on a home loan, or cash advances on a credit card. This is difficult to enforce in a failsafe manner, but an understanding of the legal requirement and a commitment to comply ought to be sought.
In instances where a pastor is remunerated on a part-time basis, it does not contravene these guidelines to receive more than 50% of that remuneration as exempt fringe benefits, providing the total fringe benefits is not more than 50% of a fulltime stipend.
EXPENSES
Where a pastor incurs expenses on behalf of the church, they are eligible for reimbursement following the same methodology as would be applied to members of the congregation. Examples would include travel to church-authorised events, and purchasing of supplies for the church office or kitchen.
SUPERANNUATION
An adjustment to the superannuation guarantee rate is due effective 1st July 2021. The new rate is 10.0%.
Superannuation contributions are to be calculated on total remuneration in compliance with the Superannuation Guarantee Rate and paid into the Pastor’s nominated fund.
Due to the Exempt Fringe Benefit issue, calculation of this amount for pastors is subject to interpretation. QB recommends that the contribution of the equivalent of 10.0% of the full Remuneration Guideline amount.
Accordingly, the Disciples Church Elder Board has determined that for our pastors, Super will be paid at the rate of 2 x Guarantee Rate x Stipend.
Additional Employee Contributions
A pastor may wish to make additional contributions to their superannuation fund and churches are encouraged to support them by facilitating this process as required. Professional advice ought to be sought by the pastor as to how to handle this issue.
DOCUMENTING REMUNERATION, TERMS AND CONDITIONS
It is recommended that a Pastoral appointment ought to include provision for the following:
- Four weeks paid Annual Leave (no leave loading). For remote churches where pastors may face significant additional travel times to visit family or embark on overseas holidays, consideration would be given to offering a fifth week of annual leave per annum. Leave is cumulative and paid out on termination, although Pastors are encouraged to not allow leave to build up beyond two years’ entitlement.
- Personal Leave (sick/carers) for two weeks per annum, cumulative, but not paid out on termination.
- Compassionate Leave for occurrences of serious illness or death in the family.
- Long Service Leave - see separate Sabbatical Policy
- Church to provide insurance coverage for Workers Compensation and Professional Indemnity, Directors and Officers, Public Liability, and Travel Insurance.
- Professional Development including funding the Pastor’s attendance at suitable conferences.
- Optional provision of a mobile phone
- Optional Establishment/support for home office
- Optional Public Holiday provisions
- Optional weekend “breaks”
- Optional Parental leave
- Optional provision of a motor vehicle
- Any other term or condition as agreed.
PROCESSING MINISTERIAL EXEMPT FRINGE BENEFITS:
There are many ways in which exempt fringe benefits can be handled between the Church Treasurer and Pastor, and which one works better in each instance will vary. The option chosen by Disciples Church Springfield is as follows:
The pastor self-manages the use of their benefits and must keep records in case of an audit. This enables the pastor to use their benefit in their own way without the need for disclosure to any other party, but does place an administrative burden on the pastor.
1. The amount determined for Exempt Fringe Benefits is paid into a bank account that the Pastor is a signatory to. The account ideally ought to include the name of the church as well, as the balance is “officially” church money until spent.
2. The Pastor (or a nominated person – such as a spouse) may spend from this account as they choose to.
3. As the Church Treasurer has limited control of the account, the Pastor is responsible for ensuring all records are maintained to provide them if there was an audit announced.
4. As the Church Treasurer has no tax invoices, the GST cannot be claimed on expenditure.