Imagine that Acme Manufacturing - since time immemorial - has allowed employees who become redundant due to lack of work to bump to any job they could perform that was held by a junior employee.  The person who gets bumped then gets to bump someone else provided he or she has the skills.  The process continues down the line until someone doesn't have the seniority to bump anyone and gets laid off.

But Article 7.05 of Acme's collective agreement says this:

When there is a reduction in work force, the most junior employees in the department affected will be first to be laid off.  The vacancies so create shall then be filled by the redundant employees who have not been themselves laid off.  The redundant employees shall be assigned the vacancies created by the layoff of junior employees in order of seniority provided they can perform the work. 

Fred, with 10 years of seniority at Acme, gets cut back from his job of Widget Machine Operator.  He wants to bump Sally, a Widget Machine Helper with 8 years of seniority.  But someone in management wakes up and realizes that the contract language doesn't really allow him to choose to bump anywhere he wants.  Article 7.05 of the Collective Agreement says the plant's most junior guy, Tom, should be laid off.  Tom is a labourer.  Fred should then be assigned to Tom's labourer job. 

So that's what Acme does.

This is when all hell breaks loose.  "YOU CAN'T DO THAT!" insists the union.  "PAST PRACTICE LETS TOM CHOOSE WHERE HE BUMPS TO."

Here's the kicker -

PAST PRACTICE NEVER CREATES A RIGHT THAT THE COLLECTIVE AGREEMENT DOESN'T GIVE!

The most basic rule of contract language interpretation is that a contract means what it says.  The only proper use of past practice is as a guide to interpretation when the contract language is unclear or ambiguous.  It's really common sense, and it works like this.

Imagine a badly-written contract clause could be read two ways:  we'll call them interpretation A and interpretation B.  All the logical rules of contract interpretation fail to make it clear which interpretation is correct.  A grievance arbitrator would then have to turn to "extrinsic evidence" - evidence from outside the contract itself.  And the number one form of extrinsic evidence is past practice. 

The arbitrator would ask "What have the parties done in the past?"  The logic of this is that the parties are probably doing what they thought they contractually had to do - in other words, their practice will probably show their own interpretation.  So if the practice showed that in the last five times this clause was put into practice the practice was undisputedly B, B, B, B, and B, then the parties probably thought interpretation B was correct.  Of course if the practice was inconsistent, such as A, B, A, B, and A, it simply would not be helpful, and the arbitrator would have to decide the correct interpretation some other way.

Now let's back to Acme's practice and Article 7.05:

• First, the language of 7.05 is pretty clear.  Because it is not ambiguous, an arbitrator has to apply the language as written, ignoring the past practice. 
•  Second, even if the language were unclear and ambiguous, the practice that the union wants to keep [i.e. give Fred the option of picking any job he has the seniority and skills for] is simply not one of the possible interpretations of the language.  It isn't an example of interpretation A or interpretation B in action - it's Z.  Therefore it can't be a case of the parties practising what they meant to write.  It's a case of the parties ignoring what they wrote and doing something totally screwed up!

 So in Acme's case, the company can ignore the practice and revert to the clear language of the collective agreement.  They do not have to continue the practice.

We're not done, though.  If the union is smart, they'll try to argue that even though the company is contractually correct, they are "estopped"  [i.e. barred] from reverting to their contractual system.   In my next article, I'll tell you about this magical term estoppel, and explain why the union is probably wrong again!