Religious Law has Ultimate Power in Employment Contracts

25 September 2017

The force of religious laws within employment contracts have recently been reaffirmed by the New South Wales Supreme Court.

Justice Paul Brereton found that the dismissal of a Rabbi who earned more than $2 million over the past three years was wrongful, as after 32 years in the role he was made redundant by the Sydney Synagogue, despite lifetime tenure being an implied term within his employment contract.

He found that the guarantee of lifetime tenure (Hazakah) was an implied term within the contract because the contract was informed by Halacha (Jewish law). As a result, the only way that the Rabbi could have been dismissed lawfully was if a religious court established that he was guilty of ‘fundamental non-performance of his rabbinical duties’.

It is in writing that the Rabbi was not dismissed because of fundamental non-performance, and it was instead because the administrators could no longer afford to maintain the Rabbi’s remuneration package. The Rabbi received this termination by letter on 27 April 2017.

The administrators contended that the dismissal was lawful as the Rabbi’s contract was not informed by Jewish Law and thus the guarantee of lifetime tenure was not incorporated into the contract.

However, this argument was inconceivable considering the place of employment…a Synagogue – a Jewish place of worship which is undoubtedly directly linked to Jewish Law.

Justice Brereton’s reasoning can best be encapsulated by the quote from Engel v Adelaid Hebrew Congregation where it was said that:

parties to a contract governed by Australian law can incorporate into the contract, as a term of the contract, provision of another system of law, including Jewish law…and alternatively if not incorporated then ‘Hazakah’ is an implied term of the contract”.

The court ordered that the decision to terminate the Rabbi’s employment be declared void and the administrators pay the rabbis costs.