AMITY UNIVERSITY RAJASTHAN

LABOUR LAW ASSIGNMENT

LOCK-OUT UNDER INDUSTRIAL DISPUTE

ACT, 1947

SUBMITTED BY- Adnaan Belim SUBMITTED TO- Mr Nitya Nand Pandey

BCOM. LLB (Hons.)
7th semester
INTRODUCTION

Lockout means temporary shutdown of the factory by the employer, but not winding up (permanent) of the
factory. Lockout of the factory maybe happened due to the failure in the management affected by internal
disturbances or maybe by external disturbances. Internal disturbances maybe caused when the factory
management goes in to financial crisis or got succumbed into financial debts, disputes between workers and
workers, disputes between workers and management or may be caused by ill-treatment of workers by the
management. Sometimes factory lockouts may be caused by external influences, such as unnecessary
political parties involvement in management of workers union may be provoked for unjustified demands that
may be unaffordable by the management, which may ultimately lead to lockout of the factory. Factory
lockout is procedural aspects governed by the labour legislation of that country. Lockout of the factory is a
major issue, which affects workers 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 workers, due to unjustified demands by the workers.

Management Of Kairbetta ... vs Rajamanickam And Others on 24 March, 1960

Supreme Court of India court observed as follows;

"Just as a strike is a weapon available to the employees for enforcing their industrial demands, a lockout
is a weapon available to the employer to persuade by a coercive process the employees to see his point of
view and to accept his demands. In the struggle between capital and labour, the weapon of strike Is available
to labour and is often used by it, so is the weapon of lockout available to the employer and can be used by
him. The use of both the weapons by the respective parties Must, however, be subject to the relevant
provisions of the I D Act. Chapter V which deals with strikes and lockouts clearly brings out the antithesis
between the two weapons and the limitations subject to which both of them must be exercised."

When the lockout of the factory is illegal and justified, workers 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 workers. 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 situation
arises in the factory. No matter what it is factory lockout will cause great loss to the management and to the
workers. If lockout re-occurs, it may become threat for the existence of the factory, which finally leads to
the loss of the jobs of workers.

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 Disputes Act 1947. 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 workers 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 workers.
 Just as the strike as a weapon in the hands of the workers 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.

General Labour Unlon (Red Flag) ... vs B. V. Chavan And Ors on 16 November, 1984

Supreme Court of India expressed

"Imposing and continuing a lockout deemed to be illegal under the Act is an unfair labour practice."

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 before
lockout; or

(b) within fourteen 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 workers by way of prior notice, that is 14 days
stipulated time period should be given to the workers to respond. During these 14 day 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.

Succinctly lockout of factory should be done only after the expiry of 14 days of prior notice given by the
management.
Commentary

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

1. Notice of lockout (with or without the date of lockout) to the employees by their employer is
mandatory.
2. If the date of lockout by the employer is not mentioned in the notice, such notice is valid for six
weeks only.
3. 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).
4. 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.
5. 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.
6. 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.

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; or
(b) within fourteen days of giving such notice; or
(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)
            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)
            10     Reference of disputes to Boards, courts or Tribunals
            10A  Voluntary reference of disputes to arbitration

(3) 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.

THE REASONS BEHIND THE LOCKOUTS 

 Disputes or clashes in between workers and the management.

 Unrest, disputes or clashes in between workers and workers.
 Illegal strikes, regular strikes or continuous strikes by workers 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 employees behaviour and relationship between employees
and relationship in between management and employees To avoid disputes which leads to lockouts.  

Facts
18-july-2012, India: leading car manufacturer Maruthi Suzuki at Maneser (Haryana), workers created
extreme violence by burning alive company's general manager human resource (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 workers 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. Workers 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 the 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.

As company manufactures market demanded key models like Swift hatchback and Dzire sedan faces a huge
backlog. Maruthi 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 Maruthi Suzuki.
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, workers 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. Workers 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.