Past practices: Overview, definition, and example
What are past practices?
Past practices refer to the established methods, customs, or behaviors that have been consistently followed by a company or organization over time. These practices are often informal but become part of the organizational culture or operational routine. In a legal or business context, past practices may be used as a reference point to determine how certain situations should be handled based on what has been done previously, especially when written agreements or contracts do not specifically address a matter.
Why are past practices important?
Past practices are important because they help establish expectations and consistency in the workplace. They can provide clarity on how things are typically done, making it easier to handle situations that arise in the future. In labor relations, for example, past practices can influence negotiations or disputes, as they serve as a precedent for how certain issues have been historically handled. For businesses, past practices help maintain continuity and ensure that employees and customers experience a level of predictability in operations.
Understanding past practices through an example
For example, a company has been providing annual bonuses to its employees based on performance for several years. While this bonus structure may not be explicitly written into contracts, the consistent practice of awarding bonuses has become a "past practice." If the company decides to discontinue the bonus program, employees may expect it to continue based on the long history of the practice. The company's past practice may be used in discussions or negotiations to support the continuation of this bonus system.
In another example, a union and an employer may have a long-standing past practice of allowing employees to take paid time off for personal matters without it being explicitly stated in the employment contract. If the employer attempts to change this practice, the union may reference the past practice as part of their argument to maintain the benefit for workers.
An example of a past practices clause
Here’s how a past practices clause might appear in a contract:
“The Parties agree that any practices or benefits that have been consistently provided by the Employer in the past, even if not specified in the formal contract, will continue unless both Parties mutually agree to a change. Any such changes must be documented and agreed upon in writing.”
Conclusion
Past practices are an important aspect of business operations, particularly when it comes to maintaining consistency and managing expectations. While they may not always be formally written into contracts, these practices play a significant role in shaping the culture and behavior of an organization. Businesses should be mindful of past practices, as discontinuing or altering them can lead to misunderstandings, legal challenges, or dissatisfaction among employees or clients.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.