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Strikes and Lockouts-A Contemporary Analysis

In any Industrial endeavour co-operation of labour and capital is quite essential for its success, although they have interests contrary to each other. They have different strategies and weapons to ventilate their grievances and safeguard their interests. 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.

Introduction
In the case Management of Kairbetta v/sRajamanickam And Others on 24 March, 1960
Hon'ble Supreme Court of India court has observed as follows:
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 I D Act. Chapter V which deals with strikes and lockouts clearly brings out the antithesis between the two weapons and the limitations subject to which both of them must be exercised.

Strike

Strike is one of the oldest and the most effective weapons of labour in its struggle with capital for securing economic justice.

Section 2 (q) of the Industrial Disputes Act defines:

Strike means a cessation 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 to accept employment.

The following essential requirements for the existence of a strike:

  • There must be cessation of work.
  • The cessation of work must be by a body of persons employed in any industry;
  • The strikers must have been acting in combination;
  • The strikers must be working in any establishment which can be called industry within the meaning of Section 2(j); or
  • There must be a concerted refusal; or
  • Refusal under a common understanding of any number of persons who are or have been so employed to continue to work or to accept employment;
  • They must stop work for some demands relating to employment, non-employment or the terms of employment or the conditions of labour of the workmen.

Legal Status
Section 22 of ID Act prohibits strikes in Public Utility Services and Section 23 puts a general prohibition on strikes in any industrial establishment. Hence strikes are generally illegal. However, Section 24(3) provides that a strike called in response to an illegal lock out will not be illegal. Besides, there are other situations when a strike can become legal. Section 20(1) provides for commencement of conciliation proceedings when the notice is received by the conciliation officer or on the date of the order the dispute is referred to the Board.

Until the dispute gets referred to the conciliation officer or the Board as the case may be, the conciliation does not start. Thus, in the time window between 14 days after notice of strike is issued and before the lapse of six weeks from the same date, a legal strike can take place in PUS, provided the dispute is yet to be referred.

Another occasion when a strike becomes legal is as follows. If a fresh notice of strike is issued on the same agenda as the previous dispute on which the conciliation officer had submitted a failure report on, the union can go forward with a legal strike after the mandatory 14 day cooling off period, if the government does not refer it to the Labour Court or Industrial Tribunal. The failure of conciliation proceedings last time on same grounds will be considered for the fresh strike notice as well.

Also, in non-PUS, no such time window is applicable. Unless otherwise prohibited or regulated by the Standing Orders of the establishment or any existing negotiation or conciliation proceeding is going on, workmen can go for a lightning strike.

A question may arise as to the fact that there is general prohibition on strikes in any industrial establishment vide Sec. 23. The answer to this lies in the fact that it is prohibited only if it is in breach of contract.

The strike is illegal

  1. if it is in breach of Contract of Employment.
  2. if it is in Public Utility Services.
  3. if Notice under Section 22(1) is not given.
  4. if commenced during Award or settlement period.
  5. if commenced During or within 7 days of completion of Conciliation Proceedings.
  6. if commenced During or within Two months of completion of Adjudication Proceeding

Is strike a fundamental right?

Though right to form union and right to freedom of speech and expression are guaranteed under the Constitution via Articles 19(1) (c) and 19(1) (a) respectively, the right to strike is not derived out of it. However peaceful demonstrations are allowed.

Justification of strike

Justification of a strike is a question of fact and has to be determined for each case. Justification means whether the reason for which the strike was called was serious enough or had enough potential to significantly affect the conditions of labour or terms of employment or employer employee relationships. However, use of coercion or violence during a strike negates whatever justification a strike may have.

Implication of strike on the union Positive Implications

A strike signals the transfer of power from the employer to the union. While the employer has a right to employ and retrench workers, in the case of a strike, the right to not come to the place of work is with the union. This transfer of right also means higher bargaining power for the union.

A strike is also used by the union to unite its members and send a strong signal to the management. In this case, strike also becomes an effective tool for the union to regain any lost support among the workers.

Negative Implication

The most direct implication of a strike on the workers is the non-payment of wages during the strike period. As explained earlier, the wages might be paid at a later date only if the strike is both justified and legal. However, during the strike period, the workers have to survive without pay.Hence, as the strike period keeps increasing, the bargaining power of the union starts to decrease again and might go to levels lower than the pre-strike period.

Implication of strike on the Employer

Strikes directly affect the bottom line of a company. During the initial period of strike, the bargaining power of the union is very high and employer's need to compromise is also high. The financial implication of every additional day of strike is huge and there is immense pressure on the employer to ensure an end to the strike. However, an end to the strike would generally mean some additional financial burden. Hence, for the employer, a strike is generally a lose-lose situation.

Implication of strike on the government/political setup

Strikes have a huge implication on the government as well as the political set up in the area of strike. The political parties use strikes to strike an emotional chord with the workers to maintain or enhance their vote-bank. This also puts added pressure on the government, which has to ensure that the employer is not at a disadvantage by compromising while at the same time the workers have to be satisfied.

Lockouts

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

The mention of temporary in the definition of lockout differentiates it from closure. In Mgmt of Express Newspapers Ltd, Gajendragadkar J mentions that in case of a closure, the employer does not merely close down the place of business; he closes the business itself. It is also mentioned that lockout is often used by the employer as a weapon in his armoury to compel the employees to accept his proposals.

The second part of the definition talks about the refusal by the employer to continue to employ any number of persons. This implies that the employer might refuse employment only to a certain number of employees and might allow the others to work. However, this does not mean that lockout and layoff are similar.

Layoff and lockout is both temporary and in both cases, some employees might not get employment. The big difference between layoff and lockout is elaborated by the Supreme Court in Kairbetta Estate v Rajamanicham.

The Supreme Court clarifies that the employer can resort to lay off only in one of the cases mentioned in Section 2(kkk) of ID Act whereas there is no such requirement in case of a lockout. Also, in case of lay off the employer may be liable to pay compensation whereas in case of lock out there is no such liability.

Why the word lock out?

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.
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.

Legal status
A lockout in contravention of sec 10(3), Sec 10A (4A) i.e. declaration of lock-out when an industrial dispute has been referred, is an illegal lockout. Also, a lockout in contravention of sec 22, 23 i.e. issuing a notice before lockout, is an illegal lockout (Sec 24(1)). However a lockout declared in consequence of an illegal strike is legal (Sec 24(3)). A legal lockout can become a strong tool in the hands of the employer in critical situations.

Section 2(1) defines the term Lock-out. However, the present definition is only a mutilated one. The term was originally and correctly defined in the Trade Dispute Act, 1929. From the definition given in the Trade Dispute Act, the present Act has taken the present definition but has omitted the words when such closing, suspension or refusal occurs in consequences of a dispute and is intended for the purpose of compelling those persons or of aid in another Employer in compelling persons employed by him to accept terms or condition of, or affecting employment.

In the Case General Labour Unlon (Red Flag) v/s B. V. Chavan And Ors on 16 November, 1984 Supreme Court of India expressed Imposing and continuing a lockout deemed to be illegal under the Act is an unfair labour practice.

In Sri Ramchandra Spinning Mills v/s State of Madras the Madras High Court read the deleted portion in the definition to interpret the term lock-out. According to the Court, a flood may have swept away the factory, a fire may have gutted the premises; a convulsion of nature may have sucked the whole place under ground; still if the place of employment is closed or the work is Suspended or the Employer refuses to continue to employ his previous workers, there would be a lock out and the Employer would find himself exposed to the penalties laid down in the Act. Obviously, it shows that the present definition does not convey the concept of the term lock out.

Kingfisher Airlines

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.

Lockout of any factory or industry is governed by the law called the Industrial Disputes Act 1947. According to section 22 of this Act, 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.

Procedure of Lockouts

According to Sec. 22(2)
No person employed in a public utility service shall go on Lockout in breach of contract:
  1. Without giving to the employer notice of Lockout, as hereinafter provided, within six weeks before lockout; or
  2. Within fourteen days of giving such notice; or
  3. Before the expiry of the date of lockout specified in any such notice as aforesaid; or
  4. During the pendency of any conciliation proceedings before a conciliation officer and seven days after the conclusion of such proceedings.
    Procedure of lockout meaning
Proposal to go on lockout factory should be intimated to workers by way of prior notice, that is 14 days stipulated time period should be given to the workers to respond . During this 14 days time employer should not lockout. Only after expiry of the that 14 days and management fails to resolve issues within that 14 days, employer can go for lockout on fixed date by giving notice of lockout. Such lockout should be done before the expiry of that six weeks only.

Succinctly lockout of factory should be done only after the expiry of 14 days of prior notice given by the management.

The Reasons Behind The Lockouts

  • 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.

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. [Source :TOI]

Lock-out, When Legal

The Act treats strikes and lock-out on the same basis; it treats one as the counter part of the other. (Mohammed Sumsuddin), the circumstances under which the legislature has banned strike, it has also at the Same time banned the lock-out. Thus what holds good-bad; legal-illegal, justified unjustified for strikes, holds the same for the lock-out. As such, the provisions of the Act which prohibit the strike also prohibits the lock-out.

The object and reasons for which the Lock-out are banned or prohibited are the same for which strikes are banned or prohibited. It is because the Employer and the Employees are not discriminated in their respective rights in the field of industrial relationship between the two. As such, lock-out if not in conflict with Section 22 and 23 may be said to be legal or not legal. Sections 24(1) (iii), 10(3) and 10A (4A) similarly controls the lock-out.

A lock-out in consequence of illegal strike is not deemed to be illegal. But if lock-out is illegal, Section 26(2), 27 and 28 will come in operation to deal with the situation. The Act does not lay down any guidelines to settle the claims arising out of illegal lock-out. The courts, therefore, have adopted the technique of apportioning the blame between the Employer and employees. This once again brings to the fore the concept of justifiability of lock-out.

Prohibits an employer from declaring a lockout:

in any of the eventualities mentioned therein [Section 22(2) of the Industrial Disputes Act 1947]
No employer carrying on any public utility service shall lock-out any of his workman:
  1. without giving them notice of lock-out as hereinafter provided, within six weeks before locking-out; or
  2. within fourteen days of giving such notice; or
  3. before the expiry of the date of lock-out specified in any such notice as aforesaid; or
  4. during the pendency of any conciliation proceedings before a conciliation officer and seven days after the conclusion of such proceedings

Implication of lockout on the government or Political set up

Given the tripartite set up of industrial relations in the Indian context, the government plays a very important role in the case of a lockout. Reference of the industrial dispute for adjudication is the step taken by the government which ensures that there are no legal strikes or lockouts.

A declaration of a lockout leaves the workers unemployed and creates an environment of instability. This has political ramifications and is often exploited by political institutions to their advantage. Hence, in the case of a lockout, the government pressure on management to allow production would be much more than the government pressure on union to resume work in case of a strike.

Conclusion
India in the present context of economic development programs cannot afford the unqualified right to the workers to strike or to the employer to lock-out. Compulsory arbitration as an alternative of collective bargaining has come to stay. The adoption of compulsory arbitration does not, however, necessarily mean denial of the right to strike or stifling of trade union movement. If the benefits of legislation, settlements and awards are to reach the individual worker, not only the trade union movement has to be encouraged and its outlook broadened but the laws have also be suitably tailored.

The existing legislation and judicial pronouncements lack breadth of vision. Indeed, the statutory definitions of strike and lock-out have been rendered worse by a system of interpretation which is devoid of policy-oriented approach and which lays undue stress on semantics.

The discussion of the concepts and definition of strike has sought to establish that legalistic consideration has frequently weighed with the court in interpreting and expounding the said statutory definition: We believe that emphasis on literal interpretation resulted in ignoring the ordinarily understood connotation of the term strike and in encouraging undesirable activity.

We now pass on to acts which constitute strike. Unlike the Industrial Relations Bill, 1978 the three phrases used in the definition of strike in IDA are not qualified by the expression total or partial. Further, they do not specifically take into account go-slow. The Courts have accordingly excluded go-slow from the purview of strike. However, the exclusion of go-slow from the ambit of strike throws them open to the third party suits for damages.

Bibliography
Written Sources:
  1. G.B. Pai, Labour Law in India, Vol. 1
  2. Dr. V.G. Goswami, Labour & Industrial Laws, 8th Ed., Central Law Agency
  3. Dr. Avtar Singh & Dr. Harpreet Kaur, Introduction to Labour & Industrial Law, 2nd Ed., 2008, Lexis-Nexis Butterworths Wadhwa Nagpur.

Cases Referred:
  1. Management of Kairbetta ... vs Rajamanickam And Others on 24 March, 1960
  2. Kairbetta Estate v Rajamanicham.
  3. General Labour Unlon (Red Flag) ... vs B. V. Chavan And Ors on 16 November, 1984
  4. Sri Ramchandra Spinning Mills v/s State of Madras

News Paper Source:
  1. Times of India.
Written By: Adv. R.Arunkumar B.Sc., M.L.,         

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