As for EU-Ops, don't know which one you are asking about, then it is called RCF-procedure (Reduced Contingency Fuel) that used to be called a Re-clearance flightplan before but has been changed a bit now. Not to be confused with reducing the total contingency fuel to 3% rule in EU-Ops.
In EU-Ops you generally need to have 5% contingency fuel, basically 5% of the total trip fuel.
So if you are tight with fuel and/or payload and you are flying from A to B. Then somewhere along the route about 3/4 of it or a bit further depending on many things you choose a secondary destination called Dest 2, if we refer to B as Dest 1. Before Dest 2 you choose a decision point(DP) along your route at which you are required for a certain minimum fuel, which consists of trip fuel from DP to Dest 1, alternate fuel from Dest 1, final reserve and 5% contingency fuel of that trip fuel (from DP to Dest1). So in your RCF-flightplan there is no contingency fuel calculated from A to DP, hence decreasing the minimum fuel required and/or the maximum payload.
Same is calculated from DP to Dest 2 (trip fuel, 5% contingency, alternate fuel from Dest2 and final reserve)
Provided of course that the flight is over 6 hours, multiple runways etc, weather requirements and so on, so that you will need a alternate.
So if at the DP you do not have the minimum fuel required to continue to Dest1 you shall divert to Dest2.
The decision point and Dest2 are manually selected normally by the flight planner /dispatcher when doing the flightplan of course, but there are systems that can do this automatically also.
Hope this explains