Lockouts (Industry)


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 c
ourt 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 situations 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.

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.
Source:TOI


United States

In the United States, under federal labor law, an employer may hire only temporary replacements during a lockout. In a strike, unless it is an unfair labor practice (ULP) strike, an employer may legally hire permanent replacements. Also, in many U.S. states, employees who are locked out are eligible to receive unemployment benefits, but are not eligible for such benefits during a strike.

For the above reasons, many American employers have historically been reluctant to impose lockouts, instead attempting to provoke a strike. However, as American unions have increasingly begun to resort to slowdowns rather than strikes, lockouts have come "back in fashion" for many employers. Even as incident of strikes are on the decline, incidents of lockouts are on the rise in the U.S.

Recent notable lockout incidents have been reported in professional sports, notably involving the National Basketball Association in the 1995 offseason, the 1998–99 season and 2011 offseason, the National Hockey League in the 1994–95 and 2004–05 seasons, and the National Football League in the 2011 offseason. In 2005, the NHL became the first major professional sports league in North America to cancel an entire season due to a lockout.