Past Practice Under Ambiguous Agreements

Under labor agreements, past practice has developed as an important factor in the interpretation of these agreements.

Past practice or custom is an outgrowth of the principle of interpretation by the parties. Some referees and arbitrators do not distinguish between practice and interpretation by the parties, and use the terms interchangeably. Other referees, as the early awards quoted below show, pay little attention to past practice unless it was approved by the authorized union representative. In several incidents in recent years, carriers have successfully argued that if a local chairperson was aware of a practice and made no attempt to stop or take exception to the practice, then the local chairperson places his/her approval on the practice. Important rules have been lost as a result of a local chairperson failing to act on a violation. Most referees will consider past practice when faced with ambiguous agreement provisions. Weight will be given the practice depending upon its generality, duration and mutuality.

Under labor agreements, management uses the prerogative of instituting practices. The union may not have protested the practice for a variety of reasons: the individual member(s) were ignorant of their rights, or fearful of protesting, or the matter was never brought to the attention of the official union representative. However, if the carrier can show where the local chairperson was aware of the practice and made no effort to stop it, then we have problems.

The following wide selection of decisions illustrates the variety of weight given the contentious principle of past practice in the interpretation of agreements:

"Practice, except as agreed upon, is obviously the creature of management since it alone has power to impose it, but it may not properly exercise this power to make changes in agreed upon or existing practice with respect to which the schedules were adopted, except by agreement. Of course no amount of practice, in direct conflict with the written rules operate to create a notation of the agreement, unless shown to have been consciously acquiesced in by authority as high as that which agreed upon, or is authorized to agree upon modification of, the schedule."
(Award 4061) - First Division, NRAB.

"Apart from this, as has been repeatedly held by this Division, no amount of practice contrary to schedule rights will justify violation thereof. The rules is frequently invoked that operation under a contract is evidentiary of the intent of parties making it. That rule has not application here. The practice is determined by one party-the management-not by the action of both parties to the contract."
(Awards 4839 through 4844) First Division, NRAB.

"The contention of the parties cannot be settled by the language used in this rule, and the rules is ambiguous on this point. It must be governed by the interpretation put on this rule by the parties as evidenced by past practice at this point."
(Award 8642) First Division, NRAB.

"Where the language of an agreement is ambiguous and is there-fore open to two constructions, it will be given the construction adopted by the parties to the agreement, and such construction cannot be changed except by mutual consent of both parties."
(Award 9033) First Division, NRAB.

"It is a universal tenet of construction of contracts that the interpretation which the parties gave to the contract by their conduct will ordinarily be controlling. This tenet of
construction has not the same force in the railroad industry as it has where the parties have equal freedom of contract. The railroad industry is quasi-military in the sense that an employee must generally obey orders of his superior and make complaints afterwards if he thinks the rules have been violated. Repeated violations cannot establish a right on the part of the carrier to continue them, nor work a modification or the rule. But where there is an ambiguity in the rules or, as in this case, more than ambiguity, i.e., a direct conflict, failure to complain over a period of time has great probative value in resolving the conflict." (Award 9217) First Division, NRAB.

"In any event, conceding a certain amount of ambiguity in the agreement because of seeming conflict arising on account of the wording of the Combination of Service Rule, Article 14 and Article 26, Section 4, of the agreement, the past practice of 30 years of compensating firemen in the same manner as the claimant was compensated (which practice is asserted by carrier in its submission and not denied by employees in their rebuttal) would be controlling as to the intent of the parties."
(Award 14859) First Division, NRAB.

"In view of the conflict of authorities on the issue, it would seem that the interpretation placed upon the agreement by both thereto, as evidenced by long years of practice there under, should govern.

The parties to the contract know best what is meant by its terms and are least likely to be mistaken as to its intention. Each party is alert to protect its own interests and to insist on its rights. Whatever is done by them during the period of the performance of the contract is strong evidence of the meaning of its terms as they understood and intended they should be."

"In the light of these principles, it must be held that the practical construction placed upon the agreement by the parties thereto should govern, and that the services described be held within the duties properly required of claimants on the dates in question."
(Award 13688) First Division, NRAB.

This page last updated: 03/06/2005