An industrial tribunal was told that the governors of St Thomas More Upper School, in Bedford, had not followed proper procedures in dismissing Monika Konacek who married Chris O'Neill after he left the priesthood.
Georgina Middleton, representing the governors and Bedfordshire County Council, said the school had failed to follow procedure, but added that Mrs O'Neill had 'brought about a situation where the school could not continue her employment'.
Mrs O'Neill had been a RE teacher at the Catholic school when she met Mr O'Neill, an assistant priest whose duties included visiting the school. They began a relationship in spring 1991 and their baby daughter, Jennifer, was born a year later. They married after Mr O'Neill left the priesthood in 1992.
Mrs O'Neill had alleged that she had been offered financial inducements to resign, a charge that Fr Stanley Condon, former chairman of governors, denied. 'There is no way I could do that. I was not authorised to offer any money.'
He said it would have been impossible for her to teach with any credibility. He added: 'The position of her as an an RE teacher would be quite unacceptable.'
Ms Middleton denied that Mrs O'Neill had been a victim of sexual discrimination saying she was treated the same as any man.
Nick Xydias, for Mrs O'Neill, said the school had panicked and that 'charity, understanding and forgiveness had been totally absent' in her treatment. The case was adjourned to consider compensation and a further charge of sexual discrimination. Outside the tribunal, Mrs O'Neill said: 'The whole thing has questioned my faith.'