Strikes,Lock-out,Lay-off and

Retrenchment
By
LAKSHMI SURESH.K
MBA S3 HR
NO:16
 Introduction
Every right comes with its own duties. Most powerful rights have
more duties attached to them. Today, in each country of globe whether it
is democratic, capitalist, socialist, give right to strike to the workers. But
this right must be the weapon of last resort because if this right is
misused, it will create a problem in the production and financial profit of
the industry. This would ultimately affect the economy of the country.

Today, most of the countries, especially India, are dependent upon

foreign investment and under these circumstances it is necessary that
countries who seeks foreign investment must keep some safeguard in
there respective industrial laws so that there will be no misuse of right of
strike. In India, right to protest is a fundamental right under Article 19 of
the Constitution of India. But right to strike is not a fundamental right but
a legal right and with this right statutory restriction is attached in the
industrial dispute Act, 1947.
 Strikes and Lockout
• Position in India
In India unlike America right to strike is not expressly recognized by the
law. The trade union Act, 1926 for the first time provided limited right to
strike by legalizing certain activities of a registered trade union in
furtherance of a trade dispute which otherwise breach of common
economic law. Now days a right to strike is recognized only to limited
extent permissible under the limits laid down by the law itself, as a
legitimate weapon of Trade Unions.

The right to strike in the Indian constitution set up is not absolute right
but it flow from the fundamental right to form union. As every other
fundamental right is subject to reasonable restrictions, the same is also
the case to form trade unions to give a call to the workers to go on strike
and the state can impose reasonable restrictions. In the All India Bank
Employees Association v. I. T. , the Supreme Court held,
• "the right to strike or right to declare lock out may be
controlled or restricted by appropriate industrial legislation
and the validity of such legislation would have to be tested not
with reference to the criteria laid down in clause (4) of article
19 but by totally different considerations." 

Thus, there is a guaranteed fundamental right to form

association or Labour unions but there is no fundamental right
to go on strike. Under the Industrial Dispute Act, 1947 the
ground and condition are laid down for the legal strike and if
those provisions and conditions are not fulfilled then the strike
will be illegal.
 STRIKES
It means-
• the cessation of the work by a body f persons
employed in any industry acting in combination or
• A concerted refusal of any number of persons
who are or have been so employed to continue
work or to accept employment;or
• A refusal under a common undertaking of any
number of such persons to continue to work or to
accept employment.
• Provision of valid strike under the Industrial Dispute Act, 1947- 
Section 2(q) of said Act defines the term strike, it says, "strike"
means a cassation 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 accept employment. Whenever employees want to go on
strike they have to follow the procedure provided by the Act
otherwise there strike deemed to be an illegal strike. Section
22(1) of the Industrial  Dispute Act, 1947 put certain prohibitions
on the right to strike.
• It provides that no person employed in public utility
service shall go on strike in breach of contract:

(a) Without giving to employer notice of strike with in 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.
• It is to be noted that these provisions do not
prohibit the workmen from going on strike but
require them to fulfill the condition before going
on strike. Further these provisions apply to a
public utility service only. The Industrial Dispute
Act, 1947 does not specifically mention as to
who goes on strike. However, the definition of
strike itself suggests that the strikers must be
persons, employed in any industry to do work.
• Notice of strike
Notice to strike within six weeks before striking is not necessary where
there is already lockout in existence. In mineral Miner Union vs.
Kudremukh Iron Ore Co. Ltd., it was held that the provisions of section 22
are mandatory and the date on which the workmen proposed to go on
strike should be specified in the notice. If meanwhile the date of strike
specified in the notice of strike expires, workmen have to give fresh notice.
It may be noted that if a lock out is already in existence and employees
want to resort to strike, it is not necessary to give notice as is otherwise
required. In Sadual textile Mills v. Their workmen certain workmen struck
work as a protest against the lay-off and the transfer of some workmen
from one shift to another without giving four days notice as required by
standing order 23. On these grounds a question arose whether the strike
was justified. The industrial tribunal answered in affirmative.
• Against this a writ petition was preferred in the High
Court of Rajasthen. Reversing the decision of the
Tribunal Justice Wanchoo observed:
" ....We are of opinion that what is generally known
as a lightning strike like this take place without
notice..... And each worker striking ......(is) guilty of
misconduct under the standing orders ........and
liable to be summarily dismissed.....(as)..... the strike
cannot be justified at all. " 
• General prohibition of strike-
The provisions of section 23 are general in nature. It imposes general
restrications on declaring strike in breach of contract in the both public as
well as non- public utility services in the following circumstances mainly: -

(a) During the pendency of conciliation proceedings before a board and

till the expiry of 7 days after the conclusion of such proceedings;
(b) During the pendency and 2 month's after the conclusion of
proceedings before a Labour court, Tribunal or National Tribunal;
(c) During the pendency and 2 months after the conclusion of arbitrator,
when a notification has been issued under sub- section 3 (a) of section 10
A;
(d) During any period in which a settlement or award is in operation in
respect of any of the matter covered by the settlement or award.
• The principal object of this section seems to ensure a
peaceful atmosphere to enable a conciliation or
adjudication or arbitration proceeding to go on
smoothly. This section because of its general nature of
prohibition covers all strikes irrespective of the subject
matter of the dispute pending before the authorities. It
is noteworthy that a conciliation proceedings before a
conciliation officer is no bar to strike under section 23. 
• Illegal Strike-
Section 24 provides that a strike in contravention of section 22
and 23is illegal. This section is reproduced below:
(1) A strike or a lockout shall be illegal if,

(i) It is commenced or declared in contravention of section 22

or section 23; or
(ii) It is continued on contravention of an order made under
sub section (3) of section 10 or sub section (4-A) of section 10-
A.
(2) Where a strike or lockout in pursuance of an industrial dispute
has already commenced and is in existence all 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;, provided that such strike
or lockout was not at its commencement in contravention of the
provision of this Act or the continuance thereof was not prohibited
under sub section (3) of section 10 or sub section (4-A) of 10-A
(3) A strike declared in the consequence of an illegal lockout shall
not be deemed to be illegal.
• Consequence of illegal Strike- 
Dismissal of workmen-
In M/S Burn & Co. Ltd. V, Their Workmen , it was laid down that mere participation in the
strike would not justify suspension or dismissal of workmen. Where the strike was illegal
the Supreme Court held that in case of illegal strike the only question of practical
importance would be the quantum or kind of punishment. To decide the quantum of
punishment a clear distinction has to be made between violent strikers and peaceful
strikers. 

In Punjab National Bank v. Their Employees , it was held that in the case of strike, the
employer might bar the entry of the strikers within the premises by adopting effective and
legitimate method in that behalf. He may call upon employees to vacate, and, on their
refusal to do so, take due steps to suspend them from employment, proceed to hold proper
inquires according to the standing order and pass proper orders against them subject to the
relevant provisions of the Act. 
• Wages-
it was held that in order to entitle the workmen to wages for
the period of strike, the strike should be legal and justified. A
strike is legal if it does not violate any provision of the statute.
It cannot be said to be unjustified unless the reasons for it are
entirely perverse or unreasonable. Whether particular strike is
justified or not is a question of fact, which has to be judged in
the light of the fact and circumstances of each case. The use of
force, coercion, violence or acts of sabotage resorted to by the
workmen during the strike period which was legal and justified
would disentitle them to wages for strike period. 
• The constitutional bench in Syndicate Bank v. K. Umesh Nayak decided
the matter , the Supreme Court held that a strike may be illegal if it
contravenes the provision of section 22, 23 or 24 of the Act or of any
other law or the terms of employment depending upon the facts of each
case. Similarly, a strike may be justified or unjustified depending upon
several factors such as the service conditions of the workmen, the nature
of demands of the workmen, the cause led to strike, the urgency of the
cause or demands of the workmen, the reasons for not resorting to the
dispute resolving machinery provided by the Act or the contract of
employment or the service rules provided for a machinery to resolve the
dispute, resort to strike or lock-out as a direct is prima facie unjustified.
This is, particularly so when the provisions of the law or the contract or
the service rules in that behalf are breached. For then, the action is also
illegal. 
• Right of employer to compensation for loss
caused by illegal strike-
In Rothas Industries v. Its Union , the Supreme
Court held that the remedy for illegal strike has
to be sought exclusively in section 26 of the Act.
The award granting compensation to employer
for loss of business though illegal strike is illegal
because such compensation is not a dispute
within the meaning of section 2(k) of the Act.
 Lockout

• It means 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.
Notice of lock out:-
• No employer carrying on any public utility service shall
lock‑out any of his workmen
• without giving them notice of lock‑out as hereinafter
provided, within six weeks before locking out; or
• within fourteen days of giving such notice; or
• before the expiry of the date of lock‑out specified  such notice
as aforesaid; or
• during the pendency of any conciliation proceedings before a
conciliation officer and seven days after the conclusion of
such proceedings.
• The notice of lock‑out shall be given by an employer in prescribed
form. The notice shall be displayed conspicuously by the employer
on a notice board at the main entrance to the establishment and in
the manager's office:

Provided that where a registered trade union exists, a copy of the

notice shall also be served on the Secretary of the union. The notice
of lock‑out or strike shall not be necessary, where there is already in
existence a strike or as the case may be lock‑out in the public utility
service, but the employer shall send intimation of such lock‑out or
strike on the day on which it is declared, to such authority as may be
specified by the appropriate government either generally or for a
particular area or for a particular class of public utility services. 
Report of lock-out by employer
• If on any day an employer receives from any person employed by
him any notice of strike or gives to any persons employed by him
any notice of lock-out, he shall within five days thereof, and 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. The report of notice of a strike or lock-out should
be sent by registered post or given personally to the Assistant
Labour Commissioner (Central) appointed for the local area
concerned, with copy by registered post to concerned departments. 
 Lay off and Retrenchment
• ’Lay off’ means failure, refusal or inability of
employer on account of shortage of coal, power
or raw materials or accumulation of stock or break
down of machinery or natural calamity; to give
employment to a workman on muster roll. - - ‘Lay
off’ means not giving employment within two
hours after reporting to work. - - Lay off can be for
half day also. In such case, worker can be asked to
come in second half of the shift. [section 2(kkk)].
• A factory employing 50 or more but less than 100
employees on an average per working day can lay off the
workmen, who have completed one year of service, by
paying compensation equal to 50% of salary (basic plus
DA) (section 25C of IDA). - - Employer can offer him
alternate employment, if the alternate employment does
not call for any special skill or previous experience, and
lay off compensation will not be payable if employee
refuses to accept the alternate employment (section
25E). 
• Above provisions of compensation for lay off
do not apply to (a) Industrial establishments
employing less than 50 workmen (b) seasonal
industry (c) Establishments employing 100 or
more workmen, as in their case, prior
approval of Appropriate Government is
necessary u/s 25M(1)
• Provisions for large industries for lay off –
large industries employing 100 or more
workmen on an average for preceding 12
months cannot lay-off, retrench or close down
the undertaking without permission from
Government (sections 25M to 25-O of
Industrial Disputes Act)..
• Retrenchment – ‘Retrenchment’ means termination by
the employer of service of a workman for any reason,
other than as a punishment inflicted by a disciplinary
action. However, ‘retrenchment’ does not include
voluntary retirement or retirement on reaching age of
superannuation or termination on account of non-
renewal of contract or termination on account of
continued ill-health of a workman. [section 2(oo)].
• ‘Retrenchment’ means discharge of surplus labour or staff by
employer. It is not by way of punishment. The retrenchment should
be on basis of ‘last in first out’ basis in respect of each category, i.e.
junior-most employee in the category (where there is excess)
should be retrenched first. [section 25G]. If employer wants to re-
employer persons, first preference should be given to retrenched
workmen. [section 25H].
• A worker who has completed one year of service can be retrenched
by giving one month notice (or paying one month’s salary) plus
retrenchment compensation, at the time of retirement, @ 15 days’
average wages for every completed year of service (section 25F). 
Meaning of ‘continuous service’ – Provisions of
compensation for lay off and retrenchment are applicable only to
workman who is in ‘continuous service’ for one year. As per section
25B, ‘continuous service’ includes service interrupted by sickness,
authorised leave, accident or strike which is not illegal, or lock-out or
cessation of work which is not due to fault of workman. -- In
Workmen v. Management of American Express AIR 1986 SC 548 =
1985(4) SCC 71, it was held that ‘actually worked’ cannot mean only
those days where workman worked with hammer, sickle or pen, but
must necessarily comprehend all those days during which he was in
the employment of employer and for which has been paid wages
either under express of implied contract of service or by compulsion
of statute, standing orders etc.
Procedure for retrenchment
• Section 25F, Industrial Disputes Act, provides that where
any workman in an industrial establishment, who is a
citizen of India, is to be retrenched and he belongs to a
particular category of workman in that establishment, in
the absence of any agreement between the employer and
the workman in this behalf, the employer shall ordinarily
retrench the workman who was the last person to be
employed in that category, unless for reasons to be
recorded the employer retrenches any other workman. 
Difference between lock out and lay off

The concept of 'lock-out' is essentially differnt from the concept of

'lay-off' and so where closure of business amounts to a 'lock-out under
S. 2(l), it would be impossible to bring it within the scope of 'lay-off'
under S.2(kkk). The points of distinction between 'lay-off' and 'lock-
out' may be broadly stated as follows:
1. 'Lay-off' generally occurs in continuous business, whereas 'lock-out' is
closure of business for the time-being.
2. In the case of 'lay-off' owning to the reasons specified in S. 2(kk), the
employer is unable to give employment to one or more workmen,
whereas in the case of 'lock-out' the employer deliberately closes the
business and locks out the whole body of workmen for reasons which
have no relevance to the causes specified in S. 2 (kkk).
3. In the case of 'lay-off', the employer may be liable to pay
compensation as provided by Ss. 25C, 25D and 25E of the Act,
but liability for compensation cannot be invoked in case of 'lock-
out', as the liability of the employer in cases of 'lock-out would
depend upon whether the 'lock-out' was justified and legal or
not.
4. The provisions applicable to the payment of 'lay-off'
compensation cannot be applied to cases of 'lock-out.
5. 'Lock-out' is resorted to by the employer as a weapon of
collective bargaining and also ordinarily involves an element of
malice or ill-will while 'lay-off' is actuated by the exigencies of
the business.
 Difference between strike and lockout
• A strike is a temporary work stoppage effected by one or
more groups of workers with a view to enforcing or
resisting demands or expressing grievances, or supporting
other workers in their demands or grievances.
• A lockout is a total or partial temporary closure of one or
more places of employment, or the hindering of the
normal work activities of employees, by one or more
employers with a view to enforcing or resisting demands
or expressing grievances, or supporting other employers
in their demands or grievances.
• Workers involved in a strike: Workers directly involved in a strike are
those who participated directly by stopping work. Workers indirectly
involved in a strike are those employees of the establishments
involved, or self-employed workers in the group involved, who did
not participate directly by stopping work but who were prevented
from working because of the strike.
• Workers involved in a lockout: Workers directly involved in a lockout
are those employees of the establishments involved who were
directly concerned by the labour dispute and who were prevented
from working by the lockout. Workers indirectly involved in a lockout
are those employees of the establishments involved who were not
directly concerned by the labour dispute but who were prevented
from working by the lockout
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