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Clergy and other ministers of religion could be entitled to claim the same employment rights as secular employees for the first time after a landmark ruling by the Court of Appeal.

A bishop sacked for “unbecoming conduct” won a ruling in Britain’s second-highest court that he was employed by a church and not by God.

The Rev Sylvester Stewart, a former pastor and bishop in the Pentecostal New Testament Church of God in Harrow, North London, will now be able to seek reinstatement and compensation.

The former taxi driver was sacked in June 2005 after an internal audit showed “financial irregularities”. A church “trial board” found that he had taken almost £60,000 from the Church.

It is believed to be the first time that the courts have recognised ministers as being employees of the Church.

Previously they had been regarded in law as appointments to holy office, commonly referred to as servants of God.

Lord Justice Pill, sitting with Lady Justice Arden and Lord Justice Lawrence Collins, threw out an appeal by the church against an Employment Appeal Tribunal ruling a year ago.

The tribunal had decided that Mr Stewart was their employee and entitled to make a claim under the 1996 Employment Rights Act.

Mr Stewart first became an “exhorter”, then a “licensed minister” and finally an ordained minister and bishop in 1984. The Church, part of the American-based Church of God, argued that Mr Stewart had a role as a “spiritual shepherd” to the congregation.

The judge said: “The Church of God believes that from within the priesthood of all believers God specifically selects, calls, anoints and commissions certain individuals for extraordinary service and leadership and that his special calling is of God’s sovereign will, characterised by individuals with spiritual passion, love for the lost, total involvement, lifelong sacrifice, and servant leadership rather than those seeking position or personal honour.”

Mr Stewart had been a church member all his life, including during his time working as a driving instructor between 1971 and 1999.

The judge said that when he ceased being a driving instructor he was added to the Church’s payroll and was also entitled to join a pension scheme arranged by the church. As well as spiritual tasks he had administrative ones. The work was considerable and there were no fixed hours.

He carried out services on Sundays and Mondays, held prayer meetings, ran choir practice and a youth club, visited members in hospital or prison, provided debt counselling, collected monthly mortgage payments and even officiated at weddings and other functions. He was paid from the money he collected. Soon after he was suspended and then his work “terminated”, he launched a claim for unfair dismissal seeking reinstatement and compensation at an employment tribunal in Watford.

The Church claimed that he was not employed by them, and therefore had no right to claim unfair dismissal.

The tribunal disagreed, and so did the employment appeal tribunal, which supported the original decision.

Now the three Appeal Court judges have unanimously also supported his rights as an employee. Lord Justice Pill said: “I do not consider that the dependence of salary on local collections, in the context of a prosperous local church such as Harrow, negatives the existence of a contract of employment.”

Lord Justice Pill said that upholding the employment tribunal’s decision “does not involve a general finding that ministers of religion are employees”. But Rachael Maskell, a national officer for Unite, a union that represents 2,500 ministers of religion, said: “Unite has been campaigning for 13 years for its clergy members to be recognised as employees and today’s historic judgment concludes this debate.”