'Lock-out': Concept, Legality and Justification

Distinguishing the three is the examinable content of this chapter, and it is a question of substance rather than of what the employer calls it.

Some words this chapter uses

Temporary closing means shutting the place of employment with the intention of reopening it. The temporariness is what separates a lock-out from a closure.

Suspension of work means stopping the work while the establishment itself stays open.

Refusal to continue to employ means declining to give work to persons already employed, without terminating their employment.

Lay-off, section 2(t), is a failure, refusal or inability to give employment for a reason outside the employer's will, such as a shortage of coal, power or raw materials.

Closure, section 2(h), is the permanent closing down of a place of employment or part of it.

Lock-out in consequence of an illegal strike is the situation section 63(3) protects.

Section 2(u): what a lock-out is

A 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.

Three limbs, and the third is the widest. The employer need not close anything. It is enough that he refuses to continue to employ any number of the persons employed by him. So a lock-out may be partial: one department, one shift, one category of workers.

Note what the definition does not require. It does not require notice, a declaration, a formal announcement, or any particular words. It does not require the whole establishment to stop. And it does not, on its face, require a motive.

But motive is what separates a lock-out from a lay-off in practice, and it is where problem questions live. A lock-out is an act of industrial coercion: the employer stops work in order to make the workers accept something. A lay-off is an act of inability: he cannot give work for a reason the definition in section 2(t) lists. The words of section 2(u) are wide enough to cover both situations physically, so the answer turns on why the work stopped.

Section 62(2): when a lock-out is prohibited

No employer of an industrial establishment shall lock out any of his workers:

• (a) without giving them notice of lock-out within sixty days 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; or
• (d) during the pendency of any conciliation proceedings before a conciliation officer and seven days after their conclusion; or
• (e) during the pendency of proceedings before a Tribunal or a National Industrial Tribunal and sixty days after their conclusion; or
• (f) during the pendency of arbitration proceedings before an arbitrator and sixty days after, where a notification has been issued under section 42(5); or
• (g) during any period in which a settlement or award is in operation, in respect of any of the matters covered by it.

Set that beside section 62(1) and the two are identical clause for clause. The only differences are the direction of the notice, to the workers rather than to the employer, and the fact that a strike must be "in breach of contract" while a lock-out has no equivalent qualification.

And, as with strikes, the requirement now applies to every industrial establishment. Under the repealed Industrial Disputes Act 1947 the notice provision in section 22 was confined to public utility services. The Code extends it, so an employer of any industrial establishment must now give sixty days' notice before locking out.

Sub-sections (3) to (6) apply to lock-outs too. No notice is needed where a lock-out is already in existence, but the employer must intimate it on the day it is declared to the specified authority, section 62(3). The notice of lock-out is given in the prescribed manner, section 62(5). And an employer who gives a lock-out notice must within five days report to the appropriate Government or prescribed authority and to the conciliation officer the number of notices given that day, section 62(6).

Section 63: when a lock-out is illegal

The same three rules apply as for strikes.

63(1): a lock-out is illegal if commenced or declared in contravention of section 62, or continued in contravention of an order under section 42(7).

63(2): a lock-out already commenced and in existence when an application is filed in the Tribunal, or a reference made to an arbitrator or National Industrial Tribunal, does not become illegal by that filing, provided it was not illegal at its commencement and its continuance was not prohibited under section 42(7).

63(3): a lock-out declared in consequence of an illegal strike shall not be deemed to be illegal.

Sub-section (3) is the employer's protection and it is the mirror of the workers'. If the workers strike illegally, the employer who answers with a lock-out is not himself acting illegally. The rule works both ways and neither side can rely on its own breach.

Section 64 applies equally: no person shall knowingly spend or apply any money in direct furtherance or support of an illegal lock-out.

The three-way distinction, which is the heart of this chapter

Two boundary problems come up again and again, and both are worth rehearsing.

Lock-out or lay-off? The employer says the raw material has not come; the union says he shut the gate because they refused his wage offer. The answer is the reason, and the reason is a question of fact. If the stoppage is genuinely for one of the causes in section 2(t) it is a lay-off, the employment continues, the names stay on the muster rolls, and section 67 compensation is payable. If it is a device to pressure the workers it is a lock-out, and the section 62(2) timetable applies, so a lock-out without sixty days' notice is illegal.

Lock-out or closure? The employer says he has shut down for good; the union says he intends to reopen when they give way. The answer is permanence. Section 2(h) requires the permanent closing down of a place of employment or part of it; section 2(u) requires only a temporary closing. A "closure" followed by a reopening on new terms is in substance a lock-out, and calling it a closure does not make it one.

Justification, and why it matters more for a lock-out

The distinction between legality and justification, worked in ['Strike': Concept, Legality and Justification], applies to lock-outs in exactly the same way. Legality is decided by sections 62 and 63 on the timetable. Justification is decided on the merits.

But justification carries more practical weight on the employer's side, and the reason is worth a sentence. When workers strike, the wages simply stop, and the question of whether they are paid for the strike period arises later. When an employer locks out, he is the one keeping people from earning, and whether he must pay them for the period turns on whether the lock-out was justified: a lock-out declared in answer to an illegal strike or to violence stands very differently from one declared to break a lawful wage demand.

A four-way grid is possible here as it is for strikes, and an examiner may ask for it: legal and justified, legal but unjustified, illegal but justified, and neither. Section 63(3) supplies the commonest example of the third: a lock-out declared in consequence of an illegal strike is deemed not illegal, and will usually also be justified.

A worked example

The facts. A packaging plant in Wada. Consider five situations, all beginning on 3 June.

One: the union has struck without notice since 1 June, and on 3 June the employer declares a lock-out without notice. The strike is illegal under section 63(1)(i). The lock-out, though declared without notice, is protected by section 63(3): a lock-out declared in consequence of an illegal strike shall not be deemed to be illegal.

Two: no strike; the employer simply shuts the gate on 3 June because the union has refused his wage offer. This is a lock-out within section 2(u), being a temporary closing of the place of employment. He gave no notice, so it contravenes section 62(2)(a) and is illegal under section 63(1)(i). He should also have intimated it on the day it was declared under section 62(3), and reported it within five days under section 62(6).

Three: the employer gives notice of lock-out on 3 June and shuts the gate on 25 June. Notice given within sixty days before locking out, satisfying clause (a); twenty-two days have passed, so the fourteen-day wait in clause (b) is over; and if the notice specified 25 June or earlier, clause (c) is satisfied. Provided no conciliation, adjudication or notified arbitration is pending and no settlement or award covering the matter is in operation, the lock-out is legal.

Four: the employer stops work on 3 June because a fire has destroyed the raw material store. This is not a lock-out at all. It is a lay-off within section 2(t), being an inability to give employment on account of a natural calamity or a connected reason, and the workers' names remain on the muster rolls. Section 62 does not apply; Chapter IX does, and the workers' entitlement to compensation is the subject of the next chapter.

Five: the employer announces on 3 June that the plant is closing permanently, and on 1 September reopens it with new workers on lower wages. The announcement described a closure under section 2(h), which requires permanent closing down. The reopening shows it was not permanent. In substance this was a lock-out, and being without the sixty days' notice section 62(2) requires, it was illegal. The label the employer used does not decide the character of what he did.

Now a timing trap on situation three. The employer gives notice on 3 June and shuts the gate on 12 June. Illegal. Only nine days have passed and clause (b) forbids a lock-out within fourteen days of the notice. The mirror of the same trap on the workers' side is worked in the previous chapter.

What this does NOT mean

It does not mean a lock-out is a closure. Section 2(u) requires only a temporary closing; section 2(h) requires a permanent one.

It does not mean a lock-out is a lay-off. A lay-off under section 2(t) is an inability to give employment for one of the listed causes, and the worker's name remains on the muster rolls; a lock-out is an act of industrial coercion.

It does not mean an employer may lock out without notice. Section 62(2) imposes the same sixty days' notice and fourteen-day wait as section 62(1) imposes on workers, and it now applies in every industrial establishment.

It does not mean the whole establishment must stop. The third limb of section 2(u) is a refusal to continue to employ any number of persons employed by him, so a lock-out may be partial.

It does not mean an illegal strike makes an employer's lock-out lawful in every respect. Section 63(3) deems the lock-out not illegal; whether it is justified, and what the workers are entitled to for the period, remains a separate question on the merits.

It does not mean the label decides. Whether a stoppage is a lock-out, a lay-off or a closure is a question of substance and of fact.

Limits, criticism and amendments

The symmetry of section 62 is formally complete and practically uneven, and this is the standard criticism. Sixty days' notice costs an employer the loss of surprise; it costs workers, in a workforce living on weekly wages, the whole momentum of a grievance. The provisions are identical and their burdens are not.

Section 2(u) contains no reference to motive, so the distinction between a lock-out and a lay-off is left entirely to the definition of lay-off in section 2(t) and to the tribunal's findings of fact. A statutory pointer would have made the boundary easier to police.

A lock-out attracts no compensation provision at all. A laid-off worker has section 67, and a worker whose establishment closes has section 75. A locked-out worker has nothing in the Code; his position depends on whether the lock-out is found illegal or unjustified and on what the adjudicating forum then orders.

And the reciprocity rule in section 63(3) has a hard edge. It deems a lock-out in consequence of an illegal strike not to be illegal, without any requirement of proportion. An employer may answer a one-day illegal stoppage with an indefinite lock-out and be outside section 63(1) altogether, leaving the workers to argue justification rather than legality.

Quick revision

• Section 2(u): a lock-out is 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. It may be partial.
• Section 62(2) mirrors 62(1): no lock-out without notice within sixty days before locking out; within fourteen days of the notice; before the date specified; during conciliation and seven days after; during Tribunal or National Industrial Tribunal proceedings and sixty days after; during notified arbitration and sixty days after; or during the operation of a settlement or award on matters it covers.
• 62(3): no notice where a lock-out already exists, but intimate on the day it is declared. 62(6): report within five days to the Government and the conciliation officer.
• 63(1): illegal if commenced or declared in contravention of section 62 or continued in contravention of a section 42(7) order. 63(2): not made illegal by a later filing if lawful at commencement. 63(3): a lock-out in consequence of an illegal strike is not illegal.
• 64: no knowingly spending or applying money in direct furtherance or support of an illegal lock-out.
• The three-way distinction: lock-out is temporary and coercive, employment continues, sixty days' notice, no compensation provision; lay-off is temporary and involuntary, the name stays on the muster rolls, compensation under section 67; closure is permanent, employment ends, sixty days' notice under section 74 and compensation under section 75.

Test yourself

1. Define a lock-out and identify its three limbs. Section 2(u) defines a lock-out as 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. The three limbs are alternatives, and the third is the widest: the employer need close nothing, and a refusal to go on employing any number of the persons employed by him is enough, so a lock-out may affect a single department or shift.

2. When is a lock-out illegal? Under section 63(1) when it is commenced or declared in contravention of section 62, or continued in contravention of an order made under section 42(7). Section 62(2) prohibits a lock-out without notice given within sixty days before locking out, within fourteen days of that notice, before the date of lock-out specified in it, during conciliation proceedings and seven days after their conclusion, during proceedings before a Tribunal or National Industrial Tribunal and sixty days after, during arbitration proceedings and sixty days after where a section 42(5) notification has issued, and during the operation of a settlement or award in respect of matters covered by it.

3. Distinguish a lock-out from a lay-off and from a closure. A lock-out under section 2(u) is a temporary closing, suspension of work or refusal to continue to employ, done to coerce the workers into accepting terms; the employment relationship continues, sixty days' notice is required under section 62(2), and the Code provides no compensation for the period. A lay-off under section 2(t) is a failure, refusal or inability to give employment to a worker whose name is on the muster rolls, on account of a shortage of coal, power or raw materials, the accumulation of stocks, the breakdown of machinery, a natural calamity or any other connected reason; it is involuntary rather than coercive, the name stays on the muster rolls, and compensation is payable under section 67. A closure under section 2(h) is the permanent closing down of a place of employment or part of it; the employment ends, sixty days' notice of intention to close is required under section 74, and compensation is payable under section 75. The question in every case is one of substance and fact, not of the label the employer uses.

4. An employer announces a permanent closure and reopens three months later with new workers on lower wages. What was it in law? In substance a lock-out. Section 2(h) requires the permanent closing down of a place of employment or part of it, and the reopening shows the closing was not permanent; section 2(u) requires only a temporary closing. Since no notice of lock-out was given within sixty days before it, the lock-out contravened section 62(2)(a) and was illegal under section 63(1)(i). The description the employer chose does not determine the character of what he did.

5. The workers strike without notice and the employer immediately locks out without notice. Is the lock-out illegal? No. The strike, having been commenced without the notice section 62(1) requires, is illegal under section 63(1)(i). Section 63(3) provides that a lock-out declared in consequence of an illegal strike shall not be deemed to be illegal. Whether the lock-out was justified, and what the workers are entitled to for the period, remains a separate question decided on the merits.

6. Are the obligations on employers and workers under section 62 the same? Formally, yes. Section 62(2) mirrors section 62(1) clause for clause: sixty days' notice, a fourteen-day wait, the date specified in the notice, and the four prohibitions during conciliation, adjudication, notified arbitration and the currency of a settlement or award. Section 63 applies the same tests of illegality to both and section 64 forbids funding either. The only textual differences are the direction of the notice and the words "in breach of contract" in section 62(1). Practically the burden is uneven: sixty days' notice costs an employer the element of surprise, while for workers living on weekly wages it removes the possibility of any spontaneous response to a grievance, and that is the standard criticism of the symmetry.