STRIKE, LOCKOUT, LAY-OFF, RETRENCHMENT

Strike

• Section 22(1)(a) of the Industrial dispute Act states that employees can go for the
strike in case of breach of contract provided a prior notice is given to the employer
within 6 weeks of such strike. It also includes government employees.

• The scheme of the Industrial Disputes Act, 1947 implies a right to strike in industries.
A wide interpretation of the term 'industry' by the courts includes hospitals,
educational institutions, clubs and government departments.

• Section 2 (q) of the Act defines 'strike'. "strike" means a cessation of work by a body
of persons employed in any industry acting in combination or a concerted refusal, or
a refusal under a common understanding, of any number of persons who are or have
been so employed to continue to work or to accept employment;

• Types of strike : 1. General strike, 2. Stay-in-strike, 3. Go slow

• However, strike is not expressly recognized in the Constitution of India. The Supreme
Court settled the Case of Kameshwar Prasad v. The State of Bihar on 7 July 1958
by stating that strike is not a fundamental right. Government employees have no legal
or moral rights to go on strikes.

• Sections 22, 23, and 24 all recognize the right to strike. Section 24 differentiates
between a 'legal strike' and an 'illegal strike'.

• It defines 'illegal strikes' as those which are in contravention to the procedure of going
to strike, as laid down under Sections 22 and 23. The provision thereby implies that
all strikes are not illegal and strikes in conformity with the procedure laid down, are
legally recognized.

• Prohibition of strikes and lock-outs.-Section 22

• (1) No person employed in a public utility service shall go on strike in breach of

contract—

• (a) without giving to the employer notice of strike, as herein-after provided, within
six weeks before striking; or
 • (b) within fourteen days of giving such notice; or

• (c) before the expiry of the date of strike 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.

• If on any day an employer receives from any persons employed by him any such
notices as are referred to in sub- section (1), he shall within five days thereof report to
the appropriate Government or to such authority as that Government may prescribe
the number of such notices received or given on that day.

23. General prohibition of strikes

• No workman who is employed in any industrial establishment shall go on strike in

breach of contract-

• during the pendency of conciliation proceedings before a Board and seven days after
the conclusion of such proceedings;

• during the pendency of proceedings before a Labour Court, Tribunal or National

Tribunal and two months after the conclusion of such proceedings; 2

• during the pendency of arbitration proceedings before an arbitrator and two months
after the conclusion of such proceedings;

• 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

24. Illegal strikes

• A strike or a lock- out shall be illegal if-

• It is commenced or declared in contravention of section 22 or section 23; or

• It is continued in contravention of an order made under section 10 (3) or section 10A

(4A).

• Sec 10(3) - Where an industrial dispute has been referred to a Board, Labour Court,
Tribunal or National Tribunal under this section, the appropriate Government may by
 order prohibit the continuance of any strike or lock-out in connection with such
dispute which may be in existence on the date of the reference

Sec 10 A (4A)- Prohibition during arbitration proceedings

• 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.

• Case: Mineral Minor’s Union v Kudremukh Iron Ore Co. Ltd, 1989- Provisions of
section 22 are mandatory and the date on which the workmen are supposed to go on
strike should be mentioned in the notice. If date of strike expires, a fresh notice has to
be given.

• ANZ Grindlays Bank v S. N Khatri 1995 , Bombay HC held that once a strike is held
to be illegal, the question of justifiability does not arise and the employees in public
utility services are not entitled to seek wages unless they prove that the strike was
legal and justified.

Lockout (S. 2(l))

 l)" 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;

 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.

 A weapon in the hands of employer.

 A tactic of bargaining.

 The organised activity must be an ‘industry’ under S. 2(j) satisfying the triple test;
systematic activity, organised by co-operation between the parties (direct and
substantial element is commercial), for satisfaction of human needs or desires.
  25. Prohibition of financial aid to illegal strikes and lock- outs.- No person shall
knowingly expend or apply any money in direct furtherance of support of any illegal
strike or lock- out.

 reference to the Industrial Tribunal of the dispute relating to dismissal of Janakiram

Naidu. The workmen resorted to strike hastily. In the circumstance, we think the
strike, though not illegal, was not justified and therefore the workmen could not claim
wages on justifiable basis for the period of strike.

Work to rule strike

• Work-to-rule is a job action in which employees do no more than the minimum

required by the rules of their contract, and precisely follow all safety or other
regulations, which may cause a slowdown or decrease in productivity.

• a form of protest in which employees do exactly what is stated in their contracts, and
nothing more, in order to slow down production.

• As there is no stoppage of work at all in Work-to-Rule, so it’s not a strike

Gherao

• Gherao is a collective action initiated by a group of workers under which the

management members are obstructed/ prohibited from leaving the industrial
establishment premises.

• It’s done by blocking the exit gates of the premises through the formation of human
barricades by the workers.

• It can also be defined as the encirclement of managers, to criminally intimidate them

to accept the demands of the workers. Workers may gherao members by blocking
their existence and forcing them to stay inside their cabins as well.

• The main objective behind gherao is to inflict/ impose physical and mental torture/
fear or pressure on the person being gheraoed and thus this weapon also disrupts
industrial peace to a great extent.

• Gherao also amounts to criminal conspiracy under section 120-A of the Indian penal
code.
PICKETING

• When workers are dissuaded workmen from working by stationing certain men at the
factory gates. Such a step is known as picketing. If picketing does not involve any
violence, it is perfectly legal. Pickets are workers who are on strike that stand at the
entrance to their workplace. It is basically a method of drawing public attention
towards the fact that there is a dispute between the management and employees.

The purpose of picketing is:

– to stop or persuade workers not to go to work

– to tell the public about the strike

– to persuade workers to take their union's side

• 25. Prohibition of financial aid to illegal strikes and lock- outs.- No person shall
knowingly expend or apply any money in direct furtherance of support of any illegal
strike or lock- out.

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.

Difference Between Layoff And Lockout

Layoff Lockout
Layoff implies the separation
Lockout connotes the refusal
of employees from the
from the side of an employer
employment unit by the
to employ the workers by a
employer on his inability to
provisional shutdown of the
provide employment because
enterprise despite having any
of external or internal
intention to close the business.
disruption.

It is because of trade reasons, It is a process by which the

which are beyond the control employer pressurizes or
of the employer rather than of coerces employees to accept
any industrial dispute. his demands.

A layoff is not concerned with

Lockout is one of the
the industrial dispute. The
ramifications of industrial
employer declares layoff on a
disputes.
specific circumstance.

As far as the applicability is

concerned, a layoff is
Lockout applies to the whole
applicable to a group of
establishment or industry.
workers and can be on a shift,
department, or unit basis.

The business will be

The business continues to be
temporarily closed for a
operating.
specific period.

Compensation is paid based on

In general, Compensation is
the type of lockout being
paid to laid-off workers.
declared.
 BASIS FOR COMPARISON STRIKE LOCK-OUT

Meaning Strike refers to Lock-out is

the suspension when the
of work by the employer
workers or compels the
employees, so workers to
as to compel accept his terms
the employer, to and conditions,
agree to their by shutting
demands. down the
factory.

What is it? Organized and Withholding the

collective demand for
withdrawal of labor.
labor supply.

Tool(weapon) of Workers Management

Tactic Union power Employer power

tactic tactic

Objective To gain To gain an

redressal of the advantage by
grievance, or to inflicting
cause change proprietary
through it. rights over the
workers.

Used to Initiate or resist Force

change in their employees to
working return to work.
conditions.
LAY-OFF UNDER THE INDUSTRIAL DISPUTES ACT, 1947

Section 2 (kkk) of the Industrial Disputes Act, 1947 defines the term ‘Layoff’’ as the
inability, failure, or refusal of the employer to provide employment to a workman whose
name is mentioned in the muster roll of his industrial establishment and who is not retrenched
due to the lack of power, coal, raw materials, accumulation of stocks, breakdown of
machinery or natural calamity for any other relevant reason.

Conditions essential for a lay-off:

 There must exist an inability, failure or refusal from the employer’s side to provide
employment to the workmen.

 Such inability, failure or refusal must be due to lack of power, coal, raw materials,
accumulation of stocks, breakdown of machinery or natural calamity for any other
relevant reason.

 The name of the workman must be mentioned in the muster roll of the employer’s
industrial establishment.

 The workman must not have been subjected to retrenchment.

A layoff is a measure that is used only in continuing businesses. If the employer decides to
permanently shut down his industrial establishment then layoff is of no use. Layoff must
adhere to the conditions provided in Section 2 (kkk) of the Industrial Disputes Act, 1947 or
else it will not be considered right as per the law. Layoff means there will be immediate
removal of the employees, however, such unemployment is temporary in nature so it
does not result in the termination of the already existing employer-employee relation and
leads to no alteration of the terms of such employment.

A workman whose name is mentioned in the muster roll of the employer’s industrial
establishment and who is present for work during the working hours of any day is not
employed within two hours of him being present for work is said to be laid-off for that
particular day. Similarly, if the workman is asked to work during the second half of his shift
and is employed then he is said to be laid off for half of the day. In case he is not employed
even after being present for work during the second half of the day, then he is considered to
be laid-off for the whole day.

Section 25A of the Industrial Disputes Act, 1947: non-applicability of compensation on

industries in case of Lay-off and retrenchment:

As per Section 25A, the compensation accrued from the layoff provisions mentioned in the
said Act shall not apply to the following kinds of industrial establishments:

 Such industrial establishments where less than 50 workmen worked on an average

during each working day in the preceding calendar month.

 An industrial establishment where work is done seasonally or occasionally.

Conditions precedent for providing compensation to a laid-off workman

As per Section 25C of the said Act, the workman who is laid off is entitled to compensation
that is equivalent to half of the total wages and allowance given for the said period of lay-
off.

However such compensation is subject to the following conditions –

 The workman is not a badli or a casual worker.

 The workman’s name must be mentioned in the muster roll of the industrial
establishment.

 The workman must have rendered at least one year of continuous service under
such an employer.

Conditions for non-applicability of compensation on workmen

Section 25E states when a workman shall not be entitled to layoff compensation –

1. If the workman is absent from the establishment during the required working hours at
least once a day.

2. If the workman is laid off for slowing down the efficiency of workmen in another
part of the establishment or due to the reason for a strike.
 3. If the workman expresses his refusal towards the alternative employment being
given to him, provided that:

 Such employment is given in the same establishment he has been laid off from.

 Such employment is given in any other establishment under the same employer within
5 miles radius from the establishment to which he belonged.

 Such employment as per the employer does not require any previous experience or
special skills as compared to the work that the workman can do

 Such employment provides the same wages to the workman as his previous
employment did.

Prohibition of lay-off under Industrial Disputes Act, 1947

An employer is subjected to certain restrictions while laying off workers as per Section
25M (Chapter VB added to the Industrial Disputes Act of 1947 by the Industrial Disputes
Amendment Act of 1976). An employer cannot lay off a workman whose name is
mentioned in the muster roll of his industrial establishment except when the reason for
such layoff is lack of power or a natural calamity. If the work is regarding a mine then the
reasons can also be fire, explosion, excess of inflammable gas or a flood.

RETRENCHMENT

The Industrial disputes act, 1947 as originally enacted made no provision for the payment of
retrenchment compensation to the retrenched workmen. In the absence of statutory provisions
for paying compensation, the authorities had to take into consideration various factors in
determining the amount of compensation. In 1953, a huge stock had accumulated in textile
industries. Textiles were in a situation to close one or more shifts. The closure must have
resulted in retrenchment of a large no of textile employees causing great unrest in the whole
textile industry. In order to overcome the whole situation, the president of India promulgated
the industrial disputes (amendment) ordinances, 1953 for payment of compensation for
retrenchment.
The Supreme Court in Hariprasad Shiv Shanker Shukla v. A.D. Divakar, (1957) held that
retrenchment means the discharge of surplus labour or staff by the employer for any action
whatsoever, otherwise than on a punishment inflicted by way of disciplinary action, and it has
no application Where the services of all workmen have been terminated by the employer on a
real and bona fide closure of business or where the services of all workmen have been
terminated by the employer on the business or undertaking being taken over by another
employer.

• In order to retrench any workman from the industry, first an employer need to
consider the definition of workman which is defined under section 2(s) of industrial
disputes act, 1947 which states that “workman” means any person(including an
apprentice) employed in any industry to do any manual, unskilled, skilled,
technical, operational, clerical or supervisory work for hire or reward, whether
the terms of employment be express or implied, in relation to an industrial dispute,
includes any such person who has been dismissed, discharged or retrench in
connection with dispute

• Retrenchment means termination of service of a workman by the employer by

any reason but other than punishment or disciplinary action. [section 2 (oo)]

• In simple words, if an employer discharges or removes any workman or staff

member on the ground of surplus labor or staff, but not as a disciplinary action it is
called retrenchment.

• 2(oo)- It does not include voluntary retirement of the workman; or

• (b) retirement of the workman on reaching the age of superannuation

• (bb) termination of the service on non renenwal of contract

• (c) termination of the service of a workman on the ground of continued ill-health;

• Termination of workman when the business ceases to exist is not counted as

retrenchment.

Requirements of valid retrenchment

• A retrenchment to be valid the following conditions are to be satisfied under Section

25(F) of the Industrial Dispute Act, 1947.
 • No workman employed in any industry who has been in continuous service for not
less than one year under an employer shall be retrenched by that employer until-

• The workman has been given one month’s notice in writing indicating the reasons
for retrenchment and the period of notice has expired, or the workman has been paid
in lieu of such notice, wages for the period of the notice;

• The workman has been paid, at the time of retrenchment, compensation which shall
be equivalent to fifteen days’ average pay for every completed year of continuous
service or any part thereof in excess of six months; and

• If there exists an agreement specifying a date of termination of service, no notice is

necessary in such cases

25N. Conditions precedent to retrenchment of workmen.-(For more than 100 workmen)

• (1) No workman employed who has been in continuous service for more than a year:

• (a) 3 months notice has been given stating the reasons and the notice period has
expired.

• (b) the prior permission of the appropriate Government has been taken.

25Q. Penalty for retrenchment without previous permission

• One month imprisonment or 1000 INR fine or both.

• The Bombay High Court, in State Bank of India v. Sundaramony 1975 held that
that an analysis of the definition reveals four essential ingredients, namely

1) There must be a termination of the service of a workman.

2) The termination must be by the employer,
3) For any reason whatsoever, and
4) Otherwise than as by way of punishment inflicted by way of disciplinary action.
Some Important Judgements regarding retrenchment

Byram Pestonji Gariwala v Union Bank of India and Others

In this case, the Apex court restricted the definition of ‘retrenchment’ as defined under
Section 2(oo) (bb) of the Industrial Disputes Act, 1947. It held that only when ‘discharge of
excess of labour’ is done by the employer then retrenchment is said to occur.

State Bank of India v N. Sundaramony

In this case, the Supreme Court put an end to its earlier decision expressed in Byram Pestonji
Gariwala v Union Bank of India and Others by expanding the definition of retrenchment as
defined under Section 2(oo) of the Industrial Disputes Act, 1947. It held that any
retrenchment done as per Section 2(oo) shall mean that the termination of a workman is done
by the employer for any reason whatsoever other than as a punishment in furtherance of
imposing disciplinary action and those explicitly excluded by clauses (a), (b) and (c) of the
said definition.

G. Jagadishwar Reddy v Railways, Guntakal Division

In this case, it was held that retrenchment compensation can also be claimed by casual
workers under the provisions of Section 25F of the Industrial Disputes Act, 1947 if such
casual worker had rendered continuous service for a period of one year.

Delhi Cloth and General Mills v Union of India

In this case, it was held by the Supreme Court that if the name of any workman is removed
from the muster roll of an industrial establishment then it would automatically be deemed as
the retrenchment of such workman.

Lay-off and retrenchment: a comparative analysis

 A layoff basically means the temporary termination of a workman at the

disposal of an employer while retrenchment means the removal of excess
workmen to increase the efficiency of the industrial establishment, provided that
 such removal is done for any reason whatsoever other than as a form of punishment in
furtherance of imposing disciplinary action.

 The termination in a layoff is temporary while termination in retrenchment is

permanent. The employer-employee relationship does not cease to exist in the former
and it ceases in the latter.
 In a layoff, the industrial establishment stops functioning or operating after the
declaration. However, in retrenchment, the industrial establishment continues its
functions or operations.
 A workman who had been laid off is appointed back as soon as the layoff period ends.
In the case of retrenchment, the employment of the workman is immediately
terminated, there is no further relation between the employer and the workmen.