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 executives affected by internal
disturbances or maybe by external disturbances. Internal disturbances may be occurred when the factory
executives goes in to financial illness or got fall into financial debts, disputes between employee and
employee, disputes between employee and executives or may be caused by mistreatment of employee by
the executives. Sometimes factory lockouts may be occurred by alien influences, such as unneeded
political parties involvement in executives of employee union may be provoked for unreasonable demands
that may be unaffordable by the executives, 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 executives and cannot be initiated for a
simple reason. Unlike the strikes, lockout is declared by the executives out of the consequences of clashes
between executives 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 executives 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
executives, 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 executives to announce lockout of the factory.

Why the word ‘lockout’?

Lock made is not permanent that can be closed and opened. The word 'out' can be interpreted as keeping
temporarily away executives and employees from the factory, till settlement of the issues take place caused
to due to lockout.

Factory lockout is the last weapon in the hands of the executives when an uncontrollable situations arises
in the factory. No matter what it is factory lockout will cause hue loss to the executives and to the
employee. If lockout re-occurs, it will lead to become threat for the survival of the factory, which
conclusively leads to the loss of the jobs of employee.

In Kingfisher airlines of India which went into losses amounts of 8,000 crores due to deficiency in meeting
competition in the airline industry. Which, eventually had not paid wages to its employees from last 6
months which led to unrest among employees eventually resulted strike. With the loss of around Rs. 8,000
crores by Kingfisher airlines additionally got a huge burden of another Rs. 7,000 crores lastly,which led to
announcement partial lockout by its top executives.

LOCKOUTS IN INDIA

Lockout of any factory or industry is governed by the statute 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 executive’s 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
statute, 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

PROCEDURE OF LOCKOUTS 

According to Sec. 22 (2)

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 executives 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

1
General Labour Union (Red Flag) vs. B. V. Chavan And Ors
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
executives.

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, - No
workman who is employed in any industry or factory shall go on strike in breach of contract and no
employer of any such workman shall announce a lock- out.

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

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

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

SITUTATION FOR THE LOCKOUTS 

Disputes or clashes in between employee and the executives, 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 executives. 

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 executives of the factory and their
employees. Executives should always monitor employee’s behaviour and relationship between employees
and relationship in between executives and employees to avoid disputes which leads to lockouts.

INDIAN CASES WHERE LOCKOUT OCCURED

Facts
India popular car manufacturer Maruti Suzuki at Maneser (Haryana), employee created extreme duress by
burning alive company's general executive Human Resource Department Awanesh Kumar Dave to death,
burnt down office property, injured several other executives, supervisors, and the Japanese executive of the
factory was also assaulted. 91 employee were arrested for this unlawful act. Employee union alleges that
this incident happened due to the supervisor made objectionable remark against a worker. When employee
opposed it, they misbehaved with them and suspended the worker that led to such duress sitution. But the
executives alleges that the workers' union pressurised the executives from taking disciplinary action against
the employee. Finally executives declared temporary close down of the car Manufacturing factory that
produces about 1600 units per day. Economically, per day loss is about Rs. 70 crores. 2
As company manufactures market demanded key models like Swift hatchback and Dzire sedan faces a
huge backlog. Maruti Suzuki opponents like Ford, Skoda and Hyundai got benefited in the market as many
people tilted to other brands in the view of long period for delivery of cars from Maruti Suzuki. 3

2
Source – Times of India
3
ibid
No payment for 2000 staff on August 1st, 2012 Executive’s decided that no one working at the Manesar
factory will be given wages. According to the general rule, after the company's lockout, employee are not
given wages till the time lockout is revoked. The monthly wages of its employees for the period before the
incident, will be paid only after the lockout is withdrawn and the factory starts functioning. 4

4
ibid