Legal term of narrower implication than “custom and practice”, used to refer to a practice whereby the employer grants employees extra payments and benefits over and above those prescribed by law, collective agreement or the individual contract of employment, and does so consistently (at regular intervals). In Austria the courts hold that, once such payments and benefits have been granted on two or more occasions without any disclaimer of commitment for the future, the employee acquires an established entitlement to them. Accordingly, the employer loses the right to decide unilaterally to abolish the practice concerned and its discontinuance requires the individual consent of each employee affected.
From the legal point of view, it is not the practice as such which is deemed to constitute the legal basis of the employee's entitlement. Rather, it is the fact that the employer follows the practice consistently, without any proviso, which is interpreted by the courts as an implied declaration of intent to employees by the employer to continue it in the future. Given that the employees are seen as having consented to this declaration of intent by accepting the payments and benefits concerned, the result is an implied addition to the contract of employment which is binding on both parties. Although this legal interpretation is questioned in the literature, the decisive factor is that the courts continue to apply it and what happens in reality therefore has to be adjusted to it. However, the case-law is also problematic from the standpoint of legal policy, since it consolidates practices which arise when times are good and deprives employers of any scope for backing down from them unilaterally when business conditions worsen. As an institution, therefore, custom represents an element of rigidity in an industrial relations context in which flexibility is acquiring growing importance.