The Case

(2017)

South Head and District Synagogue (Sydney) was failing financially and administrators were appointed. The administrators attempted to make the Chief Rabbi of the synagogue, Rabbi Milecki’s position redundant. The administrators argued that the synagogue was unable to make the payments due to Rabbi Milecki under his employment contract. To try to fix its financial position, the synagogue had reduced Rabbi Milecki’s annual income from $843,000 to $756,000 in 2016, and sought to reduce it further in 2017 to $641,000.

Rabbi Milecki’s employment contract provided that it was subject to Halacha or Jewish law. Rabbi Milecki argued that Hazakah was a term of his employment contract, which was a guarantee of life tenure. As such, Rabbi Milecki’s employment could not be terminated, other than with his agreement or in accordance with the decision of a Din Torah finding that he had not properly performed his duties.

The administrators sought a determination from the Supreme Court that Rabbi Milecki’s employment could be lawfully terminated other than by agreement with Rabbi Milecki or by a Din Torah. Rabbi Milecki argued that the administrators’ purported termination of his employment was wrongful and sought an injunction restraining them from effecting the dismissal.

The Verdict

The Supreme Court accepted that Rabbi Milecki’s contract was governed by Jewish law and attracted the Hazakah term.

His employment contract contained no express provisions outlining the duration of the contract or the notice to be given on employment termination.

The Court held Rabbi Milecki was entitled to life tenure, subject to agreement to the contrary or a decision of a properly constituted Din Torah. The Court held that the proposed dismissal of Rabbi Milecki was a wrongful termination and granted an injunction restraining the administrators from proceeding with it. The administrators were also ordered to pay Rabbi Milecki’s legal costs.

If South Head and District Synagogue (Sydney) could not continue to pay Rabbi Milecki these unpaid entitlements, it would give rise to a claim for unpaid arrears in either the winding up of the company or under a deed of company arrangement.

The Lessons

This case demonstrates that when drafting an employment contract you can make the contract subject to other systems of law or other documents such as policies and agreements.

To avoid inappropriate incorporation, it is preferable to expressly specify in the contract the aspects of these other laws and documents you want to apply, and include entire agreement clauses to otherwise exclude those external documents from being incorporated into and forming part of the contract.

You must exercise caution when seeking to terminate the employment of an employee. The contract of employment and industrial agreements that apply must be reviewed, and the consequences of such termination examined and considered before any action is taken.

Please note: Case law is reported as correct and current at time of publishing. Be aware that cases in lower courts may be appealed and decisions subsequently overturned.