LOCKOUTS SCOPE, IMPLICATIONS AND RESTRICTIONS

ABSTRACT

This project tries to look at the scope, implications and restrictions of lockouts on the major
stakeholders in an Industrial relations set-up that is employer. An analytical perspective to the
issue of lockout is given, highlighting the transfer of power from employee to employer in the
case of declaration of a lock-out. The project about the legal status of lock-out and their
implications on the major stakeholder. A real life case is presented to highlight the situations in
which the employer and the union resort to such actions.

INTRODUCTION

Lockout implies temporary close down of the factory by the employer, but not winding up of the
factory. Lockout of the factory occur due to the non-performance in the management affected by
internal disturbances or maybe by external disturbances. Internal disturbances may be occurred
when the factory management goes in to financial illness or got fall into financial debts, disputes
between employee and employee, disputes between employee and management or may be caused
by mistreatment of employee by the management. Sometimes factory lockouts may be occurred
by alien influences, such as unneeded political parties involvement in management of employee
union may be provoked for unreasonable demands that may be unaffordable by the management,
which may finally lead to lockout situation of the factory. Factory lockout is procedural aspects
governed by the labour legislation of that nation. Lockout of the factory is an important issue,
which affects employee as well as management and cannot be initiated for a simple reason. Unlike
the strikes, lockout is declared by the management out of the consequences of clashes between
management and the employee, due to unjustified demands by the employee. The apex court of
India Observed-

"Strike is a weapon available to the employee for enforcing their industrial demands, a lockout is a
weapon available to the management to persuade by a coercive process the employee to see his
point of view and to accept his demands. In the conflict between capital and labour, the weapon of
strike is available to employee and is often used by them, in a same manner weapon of lockout is
available to the employer. The use of both the weapons by the respective parties must, however,
be subject to the relevant statutes of the Industrial Dispute Act, Chapter V which deals with strikes
and lockouts and clearly brings out the contrary view between the two weapons and the
limitations subject to which both of them have to be exercised." 

When the lockout of the factory is illegitimate and justified, employee are not entitled to pay
wages by the management, as the principal of 'no work no pay'. The question of illegality or
unjustified of lockout, mainly arises when it has been done without issuing notice in advance to
the employee. Besides, there must be justified reasons by the management to declare lockout of
the factory, which ultimately affect earnings of the workmen and also the management.

Why the word ‘lockout’?

Lock made is not permanent that can be closed and opened. The word 'out' can be understood as

keeping temporarily away management and employees from the factory, till settlement of the
issues caused to lockout.

Factory lockout is the ultimate weapon in the hands of the management when an uncontrollable
situations arises in the factory. No matter what it is factory lockout will cause great loss to the
management and to the employee. If lockout re-occurs, it may become threat for the existence of
the factory, which finally leads to the loss of the jobs of employee.

In Kingfisher airlines of India went into losses amounts of 8,000 crores due to failure in meeting
competition in the aviation industry eventually had not paid salaries to its employees for a period
of six months which led to agitation among employees eventually resorted for strike. With the loss
of Rs. 8,000 crores by Kingfisher airlines additionally got a burden of another Rs. 7,000 crores
hence declare partial lockout by its top officials on 1st September 2012.
LOCKOUTS IN INDIA

Lockout of any factory or industry is governed by the law called the Industrial Dispute Act.
According to section 22 of this Act, lockout of factory or industry must be done only after issuing
prior notice to concern employees. If not, such lockout shall be treated as illegal lockout and
concerned factory or industry shall be penalised according to the Industrial Disputes Act 1947.

A lockout is a work stoppage in which an employer prevents employees from working. It is

declared by employers to put pressure on their employee to come to their way by consensus
about settlement of issued lead to lockout. This is different from a strike, in which employees
refuse to work. Thus, a lockout is employers’ weapon while a strike is raised on part of
employees. According to section 2(1) of Industrial Disputes Act 1947, lock-out means the
temporary closing of a place of employment or the suspension of work or the refusal by an
employer to continue to employ any number of persons employed by him.

According to Industrial Disputes Act 1947,Lockout Sec. 2(1): Lockout means "the temporary
closing of a place of employment, or the suspension of work, or the refusal by an employer to
continue to employ any number of persons employed by him". Lockout is the antithesis of strike.

 It is a weapon of the employer while strike is weapon in the hands of employee.

Just as the strike as a weapon in the hands of the employee for enforcing their demands, lockout is
a weapon available to the employer to make their employees to come to their way and to make
accept them to the management terms and conditions. The Industrial Dispute Act does not intend
to take away these rights .However, the rights of strikes and lockouts have been restricted to
achieve the purpose of the Act, namely peaceful investigation and settlement of the industrial
disputes. Apex Court of India expressed, "Imposing and continuing a lockout deemed to be illegal
under the Act is an unfair labour practice."1

1
General Labour Union (Red Flag) vs. B. V. Chavan And Ors
PROCEDURE OF LOCKOUTS 

According to Sec. 22 (2)

No person employed in a public utility service shall go on Lockout in breach of contract- 

(a) without giving to the employer notice of Lockout, as hereinafter provided, within six weeks
beforelockout
(b) within 14 days of giving such notice; or 
(c) before the expiry of the date of lockout specified in any such notice as aforesaid; or
(d) During the pendency of any conciliation proceedings before a conciliation officer and seven
days after the conclusion of such proceedings.

Procedure of lockout meaning

Proposal to go on lockout factory should be intimated to employee by way of prior notice that is
14 days stipulated time period should be given to the employee to respond. During this 14 days’
time employer should not lockout. Only after expiry of the that 14 days and management fails to
resolve issues within that 14 days, employer can go for lockout on fixed date by giving notice of
lockout. Such lockout should be done before the expiry of that six weeks only. 
Shortly, lockout of factory should be done only after the expiry of 14 days of prior notice given by
the management.

Subsection 2 is applicable to the workmen employed in public utility services and lays down that
“no person employed in a public utility service shall go on without following below said steps

 Notice of lockout (with or without the date of lockout) to the employees by their employer
is mandatory.
 If the date of lockout by the employer is not mentioned in the notice, such notice is valid
for six weeks only.
 If the date of lockout is mentioned in the notice, the date of lockout should not be before
the expiry of 14 days from the date of notice of strike according to the clause (b).
Therefore employers should not go on lockout before the expiry of 14 days from the date of issue
of notice of lockout to the employees. Notice of lockout without the date of lockout is valid for six
weeks only, if employer do not go on lockout within six weeks, a fresh notice of lockout by
employer is necessary, if employer wants to go on lockout. Employers should not go on lockout
during the pendency of any conciliation proceedings before a conciliation officer and seven days
after the conclusion of such proceedings.

RESTRICTION

General prohibition of strikes and lock- outs Section 23 of The Industrial Disputes Act, 1947,

General prohibition of strikes and lock outs - No workman who is employed in any industrial
establishment shall go on strike in breach of contract and no employer of any such workman shall
declare a lock- out.

(a) during the pendency of conciliation proceedings before a Board and seven days after the
conclusion of such proceedings;
(b) during the pendency of proceedings before a Labour Court, Tribunal or National Tribunal] and
two months after the conclusion of such proceedings; 
(bb) during the pendency of arbitration proceedings before an arbitrator and two months after the
conclusion of such proceedings, where a notification has been issued under sub- section (3A) of
section 10A or 10A. Voluntary reference of disputes to arbitration
(c) during any period in which a settlement or award is in operation, in respect of any of the
matters covered by the settlement or award.

Prohibits an employer from declaring a lockout in any of the eventualities mentioned therein

Section 22(2) of the Industrial Disputes Act 1947.

No employer carrying on any public utility service shall lock-out any of his workman.

(a) without giving them notice of lock-out as hereinafter provided, within six weeks before
locking-out
(b)within 14days of giving such notice
(c) before the expiry of the date of lock-out specified in any such notice as aforesaid or
(d) during the pendency of any conciliation proceedings before a conciliation officer and seven
days after the conclusion of such proceedings.

Legal strikes and Lockouts Section 24 of ID Act 1947

A strike or a lockout shall be illegal, if employers or worker who ever disobeys or fails to follow
Sec 22, 23, 10(3), 10-A (4-A) for commencing strikes or lockout, those strikes and lockout are
said to illegal. 

Section 22 Prohibition of strikes and Lockouts (Notice is mandatory in public utility services)
Section 23 General prohibition of strikes and Lockouts (if said matter is pending before board, a
Labour Court, Tribunal or national tribunal or arbitrator as mention under Sec 10 & 10A or
settlement or about is in operation).

Section 10 Reference of disputes to Boards, courts or Tribunals 

Section 10A Voluntary reference of disputes to arbitration. A lock-out declared in consequence of
an illegal strike or a strike declared in consequence of an illegal lock-out shall not be deemed to
be illegal.

Penalty for illegal strikes and lock-outs. [Section 26] of the Industrial Dispute Act 1947.

Penalty for illegal strikes and lock-outs.- 

(1) Any workman who commences, continues or otherwise acts in furtherance of, a strike which is
illegal under this Act, shall be punishable with imprisonment for a term which may extend to one
month, or with fine which may extend to fifty rupees, or with both.

(2) Any employer who commences, continues, or otherwise acts in furtherance of a lock-out
which is illegal under this Act, shall be punishable with imprisonment for a term which may
extend to one month, or with fine which may extend to one thousand rupees, or with both. 
SITUTATION FOR THE LOCKOUTS 

Disputes or clashes in between employee and the management, Unrest, disputes or clashes in
between employee and employee, Illegal strikes, regular strikes or continuous strikes by employee
may lead to lockout of factory or industry. External environmental disturbance due to unstable
governments, may lead to lockouts of factories or industries. Continuous or accumulated financial
losses of factory or industry, may lead to opt lockout by the management. 

Maybe lockout, if any company involves in any fraudulent or illegal activities. Failure in
maintaining proper industrial relations, industrial peace and harmony.

Lockout of the factory is regarded as major issue which affects both management of the factory
and their employees. Management should always monitor employee’s behaviour and relationship
between employees and relationship in between management and employees to avoid disputes
which leads to lockouts.

INDIAN CASES WHERE LOCKOUT OCCURED

Facts
India leading car manufacturer Maruti Suzuki at Maneser (Haryana), employee created extreme
violence by burning alive company's general manager human resource department (Awanish
Kumar Dev) to death, burnt down office furniture, injured several executives, supervisors,
managers and the Japanese manager of the factory was also attacked. 91 employee were arrested
for this brutal act including causing heavy damage to the company's property. The sequence of
events began in the morning with a worker beating up a supervisor on the shop floor. Employee
union alleges that this incident happened due to the supervisor made objectionable remark against
a permanent worker, who belongs to the Scheduled Caste category. When we opposed it, they
misbehaved with us and suspended the worker that led to violence. But the management alleges
that the workers' union prevented the management from taking disciplinary action against the
worker. Finally management declared temporary close down of the car Manufacturing plant that
produces about 1600 units per day. In terms of value, per day loss is about Rs. 70 crores. By then
Cars waiting for delivery to its customers were more than one lakh units that may take more than
five months to begin delivery due to lockout.2
As company manufactures market demanded key models like Swift hatchback and Dzire sedan
faces a huge backlog. Maruti Suzuki competitors like Ford, Skoda and Hyundai got benefited in
the market as many people shift to other brands in the view of long waiting period for delivery of
cars from Maruti Suzuki.3
No payment for 2000 staff on August 1st, 2012 Company decided that no one working at the
Manesar plant will be given salary. According to the rule, after the company's lockout, employee
are not paid till the time it (lockout) is revoked. The monthly salaries of its employees for the
period before the incident, will be paid only after the lockout is withdrawn and the plant starts
functioning. Employee had damaged everything like computers, server cables and entire data on
July 18. Eventually company has no records of its employees and their duty-hours details for the
entire month and finally company decided to pay its employees only after retrieving their data.4

2
Source – Times of India
3
ibid
4
ibid