A recent case in the Supreme Court of New South Wales found an employee’s employment contract was subject to Jewish law and an implied term of life tenure was found, preventing the employer from dismissing the employee despite going into voluntary administration.
In a recent case, In the matter of South Head & District Synagogue (Sydney) (Administrators appointed)  NSWSC 823, the Supreme Court of New South Wales upheld the application of Jewish law in finding a Rabbi was unfairly dismissed despite the Synagogue arguing his position was made redundant.
The Rabbi had been the Chief Rabbi since 1985 and was employed under a contract from 1999 until his dismissal. The contract was said to be “defined in accordance with Halacha”, being Orthodox Jewish law. Disputes between the parties were to be determined according to Halacha and there were no express terms regarding duration of the contract or termination.
The Rabbi’s remuneration in 2015 was $843,000. This reduced to $756,000 in 2016 and was estimated to reduce to $641,000 in 2017.
The Synagogue went into voluntary administration in 2017 and the administrators believed the company would not be able to afford to pay the Rabbi under his contract. Consequently, they dismissed him by letter on 27 April 2017 on the grounds of genuine redundancy. He was provided 4 weeks’ pay in lieu of notice and 6 weeks’ severance pay. The administrators claimed the contract was subject to an implied term that termination was valid with reasonable notice.
The Rabbi argued the contract was subject to Halacha and he was employed with a life tenure (Hazakah), only terminable if a judge of the Din Torah justified the termination under the usages, customs, practices and traditions of Judaism. Under Halacha, termination would usually only be justified if the Rabbi fundamentally failed to perform his duties.
The Court found the purpose and terms of the contract suggested it was intended that life tenure be a contractual term. This was supported by Halacha customarily regulating the legal relationship between a Rabbi and a synagogue. If Halacha was not an implied term, the Court believed this would be “antithetical to the Orthodox Jewish life to which the company, the Rabbi and the congregation all subscribed”.
As the termination was not justified on a ground recognised in Halacha by the Din Torah, the dismissal was not valid.
In considering whether an injunction preventing the administrators from acting on the dismissal should be imposed, the Court found insolvency did not justify withholding specific relief unless the company was in liquidation. As the Synagogue was not in liquidation, an injunction was appropriate.
The Court found the termination was void and the administrators could not give effect to the termination. Further, they were ordered to pay the Rabbi’s costs.
Key issues for employers
This case demonstrates the importance of context and surrounding circumstances in determining implied and incorporated terms of employment contracts. Employers should be aware of any common practices within the industry that may affect contractual terms through implication or incorporation. Where there is doubt, express terms should be included in employment contracts to ensure there is a clear understanding of each employee’s rights.