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. 
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 law, 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.

According to Sec. 22(1) of the Industrial Dispute Act 1947.
Worker should follow the rules mentioned below for doing Lockouts. The rules are as follows

  • Issue of notice of lockout is mandatory;
  • The date of lockout must be within 6 weeks from the date of issue of strike notice;
  • The day of lockout must not be within 14 days from the date of notice;
  • There should be no lockout on any day before the date specified in the strike notice;
  • There should be no lockout during the pendency of conciliation proceedings and 7 days after the conclusion of said proceedings;

  • 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.

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.