Administer Your Labor Contracts Effectively

In a union-represented workplace, the rights of the parties can be determined in a number of ways. The primary means is through collective bargaining, where the parties negotiate the terms and conditions of employment such as rates of pay, benefits and hours of employment.

The rights of the parties also can be determined, or modified, during the term of an agreement. This can happen through decisions made in the grievance and arbitration procedure, through agency proceedings, or in court rulings. For example, a union might file a grievance regarding the process used under a collective bargaining agreement to fill an open position; if the employer agreed to settle the grievance or was ordered by an arbitrator, agency or court to modify the selection procedure in that instance, this would likely result in changes in that process going forward.

The rights of the parties can also be established or modified through the day-to-day administration of the collective bargaining agreement. Employers must be careful to administer the agreement in a manner that is true to the agreement, enables the efficient operation of the business and which protects the rights for which it has negotiated. If not vigilant, employers can inadvertently give away or waive important rights under a collective bargaining agreement.

Past Practice

While clear, unambiguous language takes precedence, there are often gray areas in which the parties must operate. Actions taken in these areas establish practices that can then, under some circumstances, become binding for future situations.

A practice is a pattern of conduct that occurs with such frequency that the parties understand that it is an accepted way of doing something. It exists when a certain result has been achieved in repetitive and identical circumstances. Practices generally serve both the employer and the union, as they fill in the gaps which may not be addressed in the collective bargaining agreement and provide guidance and/or predictability for situations which occur with some frequency.

Factors used to determine the existence of a past practice include the particular facts of each case, treatment (if any) of the subject in the collective bargaining agreement, the subject matter of the practice (management usually has more discretion regarding methods of operation than matters involving employee benefits), bargaining history (was the issue discussed in negotiations?) and relationship between the parties (is this a new contract or new issue, or have the parties negotiated previous agreements where this subject could have been raised?).

Where there is no relevant contract language in an agreement, past practice is used to provide the basis of rules governing matters not included in the written contract. Where the contract language is unclear or ambiguous, past practice is used to indicate the proper interpretation of contract language. In fact, past practice is the most widely used standard to interpret unclear language.

In order to be binding, a practice must be clear (uniform, defined, understood by both parties); consistent (repeated over time—not necessarily daily, weekly or even yearly, but when it happens, a given response to that occurrence always follows); and acceptable (mutual agreement, although the mutual acceptance may be implied).

Where a practice has established a meaning for language contained in the contract and continued by the parties in a new agreement, the language is presumed to have the meaning given it by that practice. For purposes of interpreting ambiguous language, relatively few past instances are required to establish a practice; the predominant pattern of practice is controlling.

In summary, diligent contract administration is a very important component of labor relations. Effective administration will yield consistent practices, enable sound business operations and help to deliver the desired business results.

Jim Rhollans is a member of the SHRM Labor Relations Special Expertise Panel.