There came a Catholic school and a minister of education unto the Supreme Court, and stood before it. And the school said, “Oh my Lords and my Ladies, I am a private Catholic school, and am delivered of a programme for teaching a class on Ethics and Religious Culture through the prism of my Catholic faith. And when I besought the minister for leave to do so, he would not let me, though my programme be equivalent to the one he requires.” And the minister said, “Nay, but thy programme is no wise equivalent to the required one, for that programme is secular and objective, and thine religious.” Thus they spoke before the Court. Then the Court said (having deliberated a year, and with three of the seven judges present disagreeing), “Fetch me a sword.” And they brought a sword (a metaphorical one) before the Court. And the Court said, in Loyola High School v. Quebec (Attorney General), 2015 SCC 12: “Divide the programme in two, and give half to the one, and half to the other.”
More specifically, the majority (consisting of Justice Abella, who wrote the judgment, and Justices Lebel, Cromwell, and Karakatsanis) holds that while Loyola cannot be forced to teach its students about Catholicism from the rigorously secular and neutral perspective favoured by the minister, it can be required to teach the “ethics” element of the class from such a perspective. (Loyola itself does not object to adopting this posture for teaching students about other religions.) The majority orders the Minister to reconsider the denial of an exemption necessary for Loyola to teach the class according to its own programme rather than the one imposed by the Minister in light of its reasons.
This case was widely expected to produce a clear statement about the nature and extent of the religious rights of organizations under the Charter, since Loyola is a (non-profit) corporation. However, Justice Abella’s reasons seem to punt on that question, invoking instead “the religious freedom of the members of the Loyola community who seek to offer and wish to receive a Catholic education.”  Loyola was entitled to seek judicial review of the Minister’s decision, and in doing so to argue that the Minister failed to respect the rights of others.
Because the case arose by way of judicial review of an administrative decision, Justice Abella takes the approach developed in Doré v. Barreau du Québec, 2012 SCC 12,  1 S.C.R. 395, according to which the administrative decision must reflect a reasonable balancing of “the Charter protections — values and rights — at stake in their decisions with the relevant statutory mandate” [Loyola, 35]. But reasonableness, here, “requires proportionality”  and, indeed, is the exact counterpart of the (last two stages of) the “Oakes test” applied to determine the constitutionality of statutes.
Applying this framework, Justice Abella begins by pointing out that the statutory scheme under which the Minister operates makes provision for exemptions which must be granted to programmes “equivalent” to those designed by the government. This possibility would be meaningless, she observes, if “equivalent” were understood as “identical.” Besides, “[t]he exemption exists in a regulatory scheme that anticipates and sanctions the existence of private denominational schools,”  and, therefore,
a reasonable interpretation of the process for granting exemptions from the mandatory curriculum would leave at least some room for the religious character of those schools. 
In effectively requiring Loyola to teach the entire class, including the parts dealing with the Catholic religion itself, from a secular and neutral perspective, the Minister failed to make allowance for its denominational character. That decision
amounts to requiring a Catholic institution to speak about Catholicism in terms defined by the state rather than by its own understanding of Catholicism. 
Justice Abella finds that it would be possible to let the school teach its pupils about Catholicism in accordance with its own understanding of its faith without compromising the ministerial objectives for the Ethics and Religious Culture class. The Minister’s decision is, to that extent, unreasonable, because it not restrict religious rights as little as possible.
By contrast, Justice Abella finds that so long as Loyola is allowed to teach the Catholic religion and ethics from the Catholic perspective, it can be required to teach the remainder of the “ethics” part of the course “objectively.” While this may be “a delicate exercise” in the context of a denominational school, and “Loyola must be allowed some flexibility as it navigates these difficult moments,”  the requirement that it do so is not an infringement of anyone’s religious freedom, and does not compromise the school’s religious identity. Indeed, the requirement of objectivity is very important, lest
other religions … be seen not as differently legitimate belief systems, but as worthy of respect only to the extent that they aligned with the tenets of Catholicism. 
It is all about “how the discussion is framed” ― Catholicism’s “own ethical framework” must be a “significant participant rather than [a] hegemonic tutor.” 
The concurrence (a judgment by the Chief Justice and Justice Moldaver, with the agreement of Justice Rothstein) disagrees on with the majority about this, arguing that the teaching of ethics is inextricably linked to that of religions and, in particular, that the teaching of ethics generally cannot be neatly separated from the teaching of the Catholic perspective on ethics, as the majority’s conclusion would require. An attempt do so “poses serious practical difficulties and represents a significant infringement on how Loyola transmits an understanding of the Catholic faith.” 
On its way to this conclusion, the concurrence also takes a very different approach from the majority. For one thing, it squarely addresses the issue of institutional religious freedom, suggesting that corporations are entitled to assert this right “if (1) it is constituted primarily for religious purposes, and (2) its operation accords with these religious purposes.”  And for another, the concurrence does not even pretend to apply Doré and its deferential standard of review, saying that
[t]he Charter requirement that limits on rights be reasonable and demonstrably justified may be expressed in different ways in different contexts, but the basic constitutional requirement remains the same. 
On this last point, I agree with the concurrence. The pretense of deference under Doré is useless if there really is no difference between “reasonableness” and “proportionality” as the majority suggests. Actually, I think that, contrary to what the majority suggests, there ought to be a difference. While it is true that the Supreme Court has often relaxed the Oakes test, allowing the government to infringe rights not by the “least restrictive means” possible but by one of a spectrum of “reasonable alternatives,” it has also repeatedly suggested that such a relaxation is not appropriate in all circumstances. And in cases where there is a real difference between “reasonableness” and proportionality” ― deferring to a government’s interpretation of Charter rights intended to constrain it is outright pernicious.
What I like less about the concurrence reasons is the way in which it limits the scope of organizations’ rights to religious freedom and, specifically, the requirement it proposes that only those organizations “constituted primarily for religious purposes” be entitled to assert this right. The concurrence does not explain why other organizations, including for-profit ones, should not be allowed to do so, at least if they can show that “their operation accords with” religious principles. The question was not before the Court in this case, and there was no need to answer it at all.
Whether the majority was right to evade the issue of the religious rights of even primarily religious organizations, I am not sure. Admittedly it is difficult to imagine situations where such an organization would not be able to assert the claims of at least some of the members of its “community,” as Loyola was in this case, so perhaps it is, indeed, unnecessary to answer that theoretically vexing question. But there is something to be said for theoretical clarity, at least on matters well and truly before the Court.
As for the outcome, I also agree with the concurrence. I find the majority’s belief that Loyola can plausibly separate the religious teaching of Catholic ethics and the “neutral” teaching of other ethics difficult to countenance. I am also perplexed by the majority’s professed concern at the “risk” that Loyola’s students won’t see other religions as “differently legitimate.” Of course they won’t. Religions are not politically correct. They don’t talk about people being “differently spiritually abled.” They talk of prophets, believers, and heretics. If you cannot accept that, you cannot accept religious freedom at all. Still, it could have been worse.
Perhaps it will yet be. The majority, and indeed the concurrence, repeatedly emphasize the fact that Québec’s legislation specifically provides for exemptions for classes “equivalent” to those required by the government, and that the government’s stated objectives for the Ethics and Religious Culture course can be achieved by classes taught, in whole or in part, from a religious perspective. But what if the provision for exemption is removed, or the objectives re-written ― a bit like Parliament criminalized (half of) prostitution after the Court seemed to make its legality a key factor in its analysis in Canada (Attorney General) v. Bedford, 2013 SCC 72,  3 S.C.R. 1101, where it struck down the prostitution-related provisions of the Criminal Code. As it happens, the King James Bible describes the women who came to seek the judgment of Solomon as “harlots.” I do not mean to suggest anything of the sort about either Loyola or the Minister of education, but this case might have an eerie air of Bedford about it.
All in all, then a rather unsatisfactory decision, and not a very well argued one. The majority’s reasons, in particular, are full of equivocation. Not only is the outcome a dubious compromise, but almost every step of the analysis is a fudge. Do organizations have religious liberty rights of their own? We’ll tell you later. The applicable test is “reasonableness,” but it’s no different from “proportionality.” Exemptions must be granted, but perhaps only if the law allows for exemptions in the first place. Schools must be allowed flexibility in structuring their classes, but here’s how to do it. The problem with splitting so many babies in half is that one risks looking more like Herod than Solomon.
UPDATE: Over at Administrative Law Matters, Paul Daly weighs in, mostly on Loyola‘s treatment of the relationship between constitutional and administrative law. Speaking of Justice Abella’s “application of the reasonableness standard, it is difficult to discern how it is more deferential than, or analytically distinct from, proportionality.” It is indeed. Shauna Van Praagh also makes some important observations in the Globe, although I’m skeptical about her proposal to “make the Loyola judgment part of the ERC curriculum in all its variations.” The judgment, for the reasons I set out above, does not strike me as a pedagogical model.