INTRODUCTION

Lockout means temporary shutdown of the factory by the employer, but not winding up
(permanent) of the factory. 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".1 Lockout of the factory maybe happened due to the failure in
the management affected by-

a) internal disturbances or
b) 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. In the case
of Management of Kairbetta v. Rajamanickam & Others,2 the Hon’ble Supreme Court while
differentiating between strikes and lockouts remarked, “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 Industrial Disputes Act, 1947.”
1
Section 2(1) of Industrial Disputes Act, 1947.
2
When the lockout of the factory is not illegal and is justified, workers are not entitled to be
paid wages by the management, as in sync with the principal of 'no work no pay'. The
question of illegality 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 of
the management.
Elements of Lock-out
As per the definition provided under the Industrial Disputes Act, 1947, following are the
elements or components of the lockout:

a) Temporary closing of a place of employment; or

b) Suspension of work; or
c) Refusal to continue to employ any number of persons employed by the employer.

It is important to mention here that mere suspension of work unless it is accompanied by an

intention on the part of an employer as a retaliation will not amount to lock-out. 3
If an
employer shuts down his place of business as a means of reprisal or as an instrument of
coercion or as a mode of exerting pressure on the employees, or, generally speaking, when
his act is what may be called an act of belligerency, there would be a lock-out. If, on the other
hand, he shuts down his work because he cannot, for instance, get the raw material or the fuel
or the power necessary to carry on his undertaking or because he is unable to sell the goods
he had made or because his credit is exhausted or because he is losing money, that would not
be lock-out.4
Purpose of Industrial Disputes Act vis-à-vis Lockouts
The cessation of work whether by the employees or by the employer is detrimental to the
production, economy and the well-being of the society as a whole. Strikes and lockouts
cannot be utilised to cause hardship to the society at large. It is for this reason that the
Industrial Disputes Act, 1947 while not denying the right of workmen to strike has tried to
regulate it along with the right of employer to lockout.5

3
The Management of G.W. Ltd. v. Govt. of Tamilnadu, 1997 II LLJ Mad 77.
4
Ramchandra Spinning Mills, Pandapapa v. Province of Madras, AIR 1956 Mad 241.
5
Syndicate Bank v. K. Umesh Nayak, AIR 1995 SC 319.
PROCEDURE OF LOCKOUTS

Notice, Section 22(2)

According to Section 22(2) of the Industrial Disputes Act, 1947-

“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.”

Following are the key takeaways about the procedure of lockouts as per Section 22(2) of the
Industrial Disputes Act, 1947.
a) Notice of lockout (with or without the date of lockout) to the employees by their
employer is mandatory.
b) If the date of lockout by the employer is not mentioned in the notice, such notice is
valid for six weeks only.
c) 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 lockout according to the clause
(b).
d) 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.
e) 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.
f) 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.
However, no notice of lockout under Section 22(2) is necessary where there is already in
existence a strike.
Report to the Appropriate Authority, Section 22(6)
If an employer gives a notice of lock-out to any person employed by him, he must give report
of the notice of lock-out given by him to the appropriate Government within 5 days of giving
such notice. The employer must also give report of the number of notices given. Such report
may also be given to such authority as may be prescribed by the Government.

ILLEGAL LOCKOUTS
A lockout is illegal if it is:6

a) declared without prior notice in public utility service;

b) declared during the pendency of any proceedings before the authorities;
c) continued in contravention of an order made under Section 10(3) or under Section
10(4A).

Conditions in which a Lockout is not Deemed to be Illegal

a) A strike or lock-out already commenced before the reference of disputes under
Section 10- Section 24(2) provides that where a lockout in pursuance of an industrial
dispute has already been commenced and is in existence at the time of the reference of
the dispute to a Board, an arbitrator, a Labour Court, Tribunal or National Tribunal.
The continuance of such strike or lockout shall not be deemed to be illegal.
b) A lockout declared in consequence of an illegal strike- Section 24(3), a lockout
declared in consequence of an illegal strike is not deemed to be illegal. For example,
in H.M.T. Ltd. v. H.M.T. Head Office Employees Association 7, the workmen went on
illegal strike. In consequence of this illegal strike, the employer declared lock-out.
The lock-out declared by the employer in this case was held to be legal even though
the employer did not comply with the provisions of Section 22(2) and had not given
notice to the workmen.

PROTECTION OF PERSON ON REFUSAL TO TAKE PART IN ILLEGAL

LOCKOUT
According to Section 35(1), no person refusing to take part or to continue to take part in any
lock-out which is illegal under the Act, by reason of such refusal or by reason of any action
taken by him under section 35, be subject to expulsion from any trade union or society, or to
any fine or penalty, or to deprivation of any right or benefit to which he or his legal

6
Section 24 of the Industrial Disputes Act, 1947.
7
AIR 1997 SC 585.
representative would otherwise be entitled, or be liable to be placed in any respect, either
directly or indirectly, under any disability or at any disadvantage as compared with other
members of the union or society, anything to the contrary in the rules of a trade union or
society notwithstanding.

PENALTIES FOR ILLEGAL LOCK-OUTS (SECTIONS 26-28)

Different penalties for different offences committed in connection with the illegal lock-out
have been specified under Chapter VI from Section 26 to Section 28.

Penalty for Commencing Illegal Lock-outs (Section 26)

According to Section 26(2), any employer who commences, continues, or otherwise acts in
furtherance of a lock-out which is illegal under the Act, is punishable with:

(a) imprisonment for a term which may extend to one month;

(b) with fine which may extend to one thousand rupees; or

(c) with both.

Penalty for Instigation of Illegal Lock-out. (Section 27)

According to Section 27, any person who instigates or incites others to take part in, or
otherwise acts in furtherance of, a strike or lock-out which is illegal under the Act, is
punishable with:

(a) imprisonment for a term which may extend to six months; or

(b) with fine which may extend to one thousand rupees; or

(c) with both.

Penalty for Giving Financial Aid to Illegal Lock-out (Section 28)

Section 25 provides that no person shall knowingly expend or apply any money in direct
furtherance or support of any illegal strike or lock-out. According to Section 28, any person
who knowingly expends or applies any money in direct furtherance or support of any illegal
strike or lock-out is punishable:

(a) with imprisonment for a term which may extend to six months;

(b) with fine which may extend to one thousand rupees; or

(c) with both.

GUIDING FACTOR IN CONSIDERING CLAIM FOR WAGES DURING LOCK-
OUT
The position as regards the effect on the amount of wages to be awarded for the period
of lock-out or strike has been tersely stated in India Marine Service Pvt. Ltd v. Their
Workmen8. "In a case where a strike is unjustified and is followed by a lock-out which has,
because of its long duration, become unjustified, it would not be a proper course for an
industrial tribunal to direct payment of the whole of the wages for the period of the lock-out.
"; that in a case where the strike is unjustified and the lock-out is justified the workmen
would not be entitled to any wages at all. Similarly, where the strike is justified and the lock-
out is unjustified the workmen would be entitled to the entire wages for the period of strike
and lock-out. Where, however, a strike is unjustified and is followed by a lock-out which
becomes unjustified a case for apportionment of blame arises."
It has been ruled that "if the strike is illegal, wages during the period will ordinarily be
negatived unless considerate circumstances constrained a different course. Likewise, if
the lock-out is illegal full wages for the closure period shall have to be ‘forked out’," unless it
is proved by the employer that an illegal lock-out was the result of such misdemeanour and
misconduct of workmen as left no option to him but to declare a lock-out. That would
disentitle them to wages for the period of lock-out.
In between the two situations lies a grey area of twilight law. It arises when a strike is illegal
and the sequel of a lock-out legal. In such a situation the Tribunal has to view the whole
course of developments and not stop at examining the initial legitimacy. If one side or the
other behaves unreasonably or the over-all interests of good industrial relations warrant, it
would be proper exercise of judicious discretion if the Tribunal gives a direction regarding
wages for the strike period so as to mete out justice, fair play and pragmatic wisdom.
Even if a lock-out is not justified if the workmen are also blameworthy and it is their conduct
which brings about the lock-out, then there should be an apportionment of the blame between
the management and the workmen. Similarly, even if a strike is illegal and the lock-out that
follows becomes a legal defensive measure, the management cannot behave unreasonably
merely because the lock-out is born lawfully. If by subsequent conduct the Unions have
shown readiness to resume work peacefully, refusal to re-start the industry is not right and the
initial legitimacy of the lock-out loses its virtue by this blemished sequel.
In Statesman Ltd. v. Their Workmen9 on the facts, the court upheld an award to pay half the

8
AIR 1963 SC 528
9
(1976) 3 SCR 228
wages to the employees as both the parties were at fault and responsible for delay in
withdrawing the lock-out and the award crystalised a discretionary conclusion reached after a
survey of all facts and animated by a sense of broad justice.

NEED FOR THE LOCK-OUTS

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 lead to lockouts. As discussed earlier, lockout of the factory maybe
happened due to the failure in the management affected by-

a) internal disturbances or
b) 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.

To summarise, the need of lockouts arises due to the following reasons:

a) Disputes or clashes in between workers and the management- There are conflicts
between the interests of the capital and those of the labour which is the reason behind
the dispute or clashes between the workers and the management of the factory. This
ultimately necessitates the lockout of the factory.
b) Disputes or clashes among the workers themselves- There are also possibilities of
disputes and clashes among the workers themselves which has the tendency of
interrupting the flow of production. This, therefore, prods the management to opt for
lockout of the factory.
c) Illegal strikes, regular strikes or continuous strikes by workers- The illegal strikes
by the workers involved in the factory is also the principal factor necessitating the
lockout of the factory.
 d) External environmental disturbance due to unstable governments- The change in
governments implies the change in developmental ideologies and policies which may
sometimes requires certain factories or industries to be locked-out.
e) Continuous or accumulated financial losses of factory or industry- Sometimes,
when the factory or the industry may be suffering from the financial strains, the
management sees it necessary to announce the lock-out in order to recover from such
strain and get back on its feet.

 Lock-out justified and unjustified

 §15.1"Lock-out", as a result of "stay-in-strike"
The workmen staged a stay-in-strike. They came to join their duties on the next working day,
but they were asked to sign a good conduct bond before resuming their duties. The workmen
refused to sign the bond raising objection to the use of the words "at the instigation of
others." The management refused to give work and the question arose whether such refusal
was justified or it amounted to an unfair labour practice.
On the facts of the case it was held that the lock-out was unjustified. However, in view
of the financial difficulty of the company, the workmen who were kept out were
awarded 50 per cent of their respective basic wages and dearness allowance subject to
the maximum limit of fifteen days’ basic wages and dearness allowance in each half
year. 4
 §15.2Lock-out as a result of a concerted action of the workmen
Workmen assembled near the office during the recess period, stayed away from their
work, continued there till late in the evening shouting slogans, so much so that the
members of the office staff and some workers who wanted to return home after the
working hours were prevented from leaving the factory premises. It was held to be a
strike and, therefore, the lock-out from the following day was regarded as
justified. 5 No notice is necessary for lock-out if a strike is illegal. 6
 §15.3Lock-out as a result of go-slow policy
The workers resorted to go-slow tactics and as a result of go-slow tactics the lock-
out declared by the management was justified. The workers are not entitled to any
wages for the period of lock-out. 7 Workmen were held not entitled to wages for the
period of lock-out as the lock-out was necessitated by the conduct of the
workmen. 8 Go-slow is one of the most pernicious practices and has always been
considered a serious type of misconduct. 9
 §15.4§15.4 Lockout as a result of refusal to do additional work
Refusal by workmen to do additional work consequent upon introduction of a rationalization
scheme by the employer would not amount to a strike where the employer had no right in law
to ask them to do such additional work.
The closure of the mill by the employers, therefore, amounted to an illegal "lock-out"
and hence the workmen were held entitled to wages for the period in question