Understanding Strike, Lockout,

Lay-off and Closure

Strike and Lockout: Presidency Jute Mills Co Ltd vs Workmen
(1952)

The phrase ‘refusal by an employer to continue to employ’…evidently

corresponds to the phase ‘refusal to continue to work or accept
employment’ occurring in the ‘definition of strike.’

The meaning of the phrase must, therefore, be refusal by the employer to

allow a number of his workmen to attend to their duties without
terminating their services.

Thus, in a ‘lockout’, the relationship of employer and employee remains as

before; only some links to the chain are broken.

This construction would be in harmony with the generally accepted

conception of lockout.
Strike and Lockout: Presidency Jute Mills Co Ltd vs Workmen
(1952)

Lockout is the counterpart of Strike.

According to them, neither of them automatically puts an end to the relationship

of employer and employee.

In both cases, the relationship continues and in the one (strikes), it is the
suspension of services by the employees themselves, whereas in the other
(lockouts), it is the suspension of services by the employers.

In neither case is the employment finally determined; the intention of the

workmen in one case and of the employer in the other being that employment
would be continued as soon as satisfactory settlement of the cause is arrived at.”
By Labour Appellate Tribunal members JN Majumdar and RC Mitter
Lay-off Misconceptions: Does layoff amount to discharge?

“Layoff in its etymological sense was the period during which a

workman is temporarily discharged, and that when workers
were in employment and laid-off, that results in their
unemployment, however temporary, and such unemployment
would fall within the definition of layoff in Sec 2(kkk) of IDA,
1947.”

By Goswami, J in Priya Laxmi Mills Ltd Vs Mazdoor Mahajan Mandal (1977)

Lay-off Misconceptions: Does layoff amount to discharge?

“Layoff was neither temporary discharge of a workman nor

temporary suspension of his contract of service; and that it was
merely a fact of temporary unemployment of workmen.”

By Untwalia, J in Workmen of Firestone Tyre and Rubber Vs Management

(1976)
Lay-off: The Contextual Difference

“Lay-off is the period during which a workman is temporarily discharged” – Concise

Oxford Dictionary

US Context: Lay-off means discharge of the workman, which implies complete

severance of employer-employee relationship, with no continuing obligation imposed
on the employer in terms of paying any additional sums to the workman thereafter.

Indian Context: It does not signal the severance of employment relationship. It is

merely the inability of employer to provide work to a workman for reasons beyond the
control of employer, such as shortage of power, coal, raw material, etc.,

During the period of lay-off, the employer is required to pay compensation to every
workman, who has completed one year of continuous service, at the rate of fifteen
days’ average pay for all the days during which the workman is laid off.

Once the situation improves, the workman so laid off is required to resume his duties.
Lay-off - Simplified

• Lay-off means [Sec 2(kkk) of IDA, 1947]

– the failure, refusal or inability of an employer (by whom?)
– to give employment to a workman whose name is borne on the muster rolls of
his industrial establishment and who has not been retrenched (against whom?)
– on account of shortage of coal, power or raw materials or the accumulation of
stocks or the breakdown of machinery or natural calamity or for any other
connected reason (for what?)

Conditions for Lay-off

– Workman must be present during normal working hours on any day
– He is deemed to have been laid off if the employer does not provide
employment within two hours of the employee presenting himself
– Employer is required to pay 50% of wages and dearness allowance as
compensation
Lay-off and Lockout: Kairbetta Estate Vs Rajamanickam, 1960

Stated broadly, lay-off generally occurs in a continuing business

whereas a lockout is the closure of the business.

In the cases of lay-off owing to the reasons specified in section 2(kkk)

the employer is unable to give employment to one or more workmen.

In the cases of lockout the employer closes the business and locks out
the whole body of workmen for reasons which have no relevance to
causes specified in section 2(kkk).

The nature of the two concepts are entirely different so as the

consequences.
Lay-off and Lockout: Kairbetta Estate Vs Rajamanickam, 1960

In case of a lay-off the employer may be liable to pay

compensation as provided in section 25D and 25E of the Act;
but this liability cannot be invoked in the case of a lockout.

The liability of the employer in case of a lockout would depend

upon weather the lockout was justified and legal or not;

But whatever may be the liability, the provisions applicable to

the payment of lay-off compensation cannot be applied to the
cases of lockout.
By Gajendragadkar, J, Supreme Court.
Does lockout amount to discharge of employees?

Lockout Context: whether the phrase “refusal by the employer to

employ any number of persons employed by him” include
discharge or not.

“To construe the definition as including a discharge would be

against the entire tenor of the Act; the lockout was the counter
part of strike; and if a strike could not contemplate the
severance of the relation of employer-employed, it would be
strange that a lockout could do so.”
By Sarkar, J in Feroz Din Vs West Bengal, (1960)
Closure and Lockout: Management of Express Newspapers Ltd
Vs Workmen, (1962)

In the case of a closure, the employer does not merely close down
the place of business, but he closes the business itself; and so, the
closure indicates the final and irrevocable termination of business
itself.

Lockout, on the other hand, indicates the closure of the place of

business and not the closure of business itself….

Lockout is often used by the employers as a weapon in his armoury

to compel the employees to accept to his proposals just as strike is a
weapon in the armoury of the employees to compel the employer
to accept their demands.
Closure and Lockout: Management of Express Newspapers Ltd
Vs Workmen, (1962)

Though the distinction between the two concepts is thus clear in

theory, in actual practice it is not easy to decide whether the act
of closure really amounts to a closure properly so called, or
whether it is a disguise for a lockout…

Whenever a serious dispute arises between an employer and his

employees in regard to a closure, which the employees allege is a
lockout the enquiry which follows is likely to be long and elaborate
and the ultimate decision has always to depend on a careful
examination of the whole of the relevant evidence.

By Gajendragadkar, J, Supreme Court.