Sally Beattie did it for years, reluctantly hiding her sexuality while working for the Catholic Education Office – the powerful organisation that runs Melbourne's 331 Catholic schools.

While Ms Beattie enjoyed her job, she knew being a lesbian didn't exactly fit the religious ethos of her workplace. She also knew that the longer she stayed, the harder it would get.

The turning point came soon after she became pregnant through IVF with her partner. Sadly, she miscarried; that's when she decided it was time to leave.

"I couldn't turn to anyone because I knew there would be questions: What support did I have at home? Do I have a husband? That's when I realised I couldn't conceal it any more," she said.

"The whole thing really ground me down, actually. It's hard to go to work and not be able to talk about your partner, or what you're doing on the weekends. I'm a very open person, so I was embarrassed telling my friends I had to live like that. In the end I left, because I really didn't want to keep facing that every day."

It's the kind of conflict others have confronted many times before as they tried to find a job – or keep one – in a faith-based school, welfare agency or organisation.

Religious bodies in Victoria have long held the legal right to refuse staff on the basis of sexuality, gender or marital status if it doesn't align with their ethos. Now, the question being debated in State Parliament is this: should the law change?

Under proposed reforms introduced by the Andrews government, the ability of faith-based organisations to discriminate would be weakened through the reinstatement of an "inherent requirement" test.

Groups would still be able to discriminate against prospective employees, but only in limited circumstances in which they can prove religious beliefs are an inherent requirement of a job. For example, a gay person wanting to be a school gardener would be better protected by the proposed legislation, but a lesbian wanting to teach religious studies at a Christian school might not.

Faith leaders have condemned the plan, branding it as yet another attack on religious freedom. Some also make notable comparisons: that you wouldn't expect Labor to employ Liberal staffers, or a conservation group to employ a climate-change denier.

"If parents choose a faith-based education, be it Muslim or Christian, they have a right to expect that staff at that school will be advocates and role models for the religious faith of the organisation," Australian Christian Lobby spokesman Dan Flynn said.

However, others, such as the Greens and the Victorian Gay and Lesbian Rights Lobby, say the proposals don't go far enough.

"Religious exceptions are damaging people's lives," said Greens MP Sam Hibbins, who is seeking amendments to wind back the law even further.

"It's clear LGBTI employees at faith-based schools and organisations need to be protected by law from discrimination. If Labor's vote matches their rhetoric, they will support the Greens' amendments to strengthen their bill."

To that end, Mr Hibbins has an interesting point. With same-sex adoption, Safe Schools and a $15 million Pride Centre among Labor's many LGBTI policies, Premier Andrews has crafted an image as a progressive warrior, repeatedly citing the mantra that when it comes to gay rights, "equality is not negotiable".

Yet on this matter, the government has drawn a line, based on assurances Mr Andrews gave to Christian leaders at an Australian Christian Lobby forum before the 2014 state election.

The Sunday Age spoke to several people last week who, like Ms Beattie, have felt the impact of the law. Tour guide Tim Hoffmann, for instance, studied theology in the hope of getting a job teaching religious instruction but came to the conclusion "that there's little point trying".

"There might be exceptions – there would be individual schools and principals who are supportive – but how do you know which schools?" he asked.

For others, like Rebecca Smith*, the journey has been even tougher. Ms Smith used to work in a Christian welfare organisation connected to her local church – until her manager suspected she was in a same-sex relationship.

"I was told that if I didn't resign I would be fired," she said. "The fallout was devastating. I lost everything – my vocation, faith, community – and had to rebuild myself from a very broken place."

As for Equality Minister Martin Foley, he believes the proposed law has struck the right balance "between a person's right to be free from discrimination and the right to religious freedom".

* Not her real name