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Strikes and Lockouts: Legal Consequences

Strikes and Lockouts are weapons in the hands of the employee and the employer respectively to get each other to accept their demands in case of conflict. The said clashes are well known and are quite common, hence, we have the Industrial Dispute Act to regulate strikes and lockouts and prevent these conflicts from hindering progress. Now, there are statutory requirements of strikes or lockouts to be legal ; and legal consequences for illegal ones, as contemplated under the Act.
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Conflict of interests between the workers and the employers is never new to us. The employer would want to get the most out of their employees at the lowest cost to maximise profits, whereas the employees would want to get their fair share of the profits and the fundamental employee rights they are entitled to. The way Marx looks at it, this is a conflict between the material forces of production with the existing relations of production. Hence, a state policy to regulate such industrial disputes is necessary to curb unnecessary conflicts that put boulders in the path of development. Industrial Dispute Act is the statute which regulates all of this. In this article, we shall delve into the legal aspects of strikes and lockouts.

Table of Contents:

Industrial Dispute Act

This is an Act which came into force in the year 1947. The objective of this act was to promote industrial peace by facilitating investigation and settlement of industrial disputes through negotiation. It is a labour legislation to protect the workmen against victimisation by employers and to ensure social justice to both employers and employees. The unique object of the Act is to promote collective bargaining and to maintain a peaceful atmosphere in industries by avoiding illegal strikes and lockouts. It also has provisions for regulation of retrenchment and lay-off.

Now, having said that, let us specifically examine what strikes and lockouts respectively are.

Consult: Expert Corporate Lawyers Online

Strikes

Organising/Conducting a strike: Striking for rights is a globally accepted modus operandi to get the rights you deserve. The two bodies set up to supervise the application of ILO standards, the Committee on Freedom of Association (since 1952) and the Committee of Experts on the Application of Conventions and Recommendations (since 1959), have frequently stated that the right to strike is a fundamental right of workers. However, in the Indian scenario, the TK Rengarajan case[1] stated, relying on five previous judgements, that it is well-settled law that there is no fundamental right to strike.

What does strike mean under the Act?

A strike is a powerful weapon to put across the workers’ demands and grievances to the employers or management. Here, the workers refuse to work to force their employers to accept their demands since strikes from workers would affect their incomes. Strikes, as defined by the Act, is 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 essential conditions of a strike would generally be a cessation of work and concerted action. Here, as mentioned above, the workers collectively choose not to work till they get their demands accepted. 

Legal Strike

The Industrial Dispute Act provides for certain conditions where a strike can be illegal. If you are to figure out a way to strike legally, you need to make sure that the strike doesn’t fall under any of the stipulated circumstances. The act provides, under section 22 of the same, that no person employed in public utility service shall go on strike in breach of contract. The said situations where a strike would be illegal are as follows:

  • Without giving a notice to the employer of the strike within six weeks before striking; or

  • Within fourteen days of giving such notice; or

  • Before the expiry of the date of strike specified in any 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.

Notice:

A valid notice is to be served six weeks before the strike commences. However, this does not apply to strikes where there is already a lockout in place. In Mineral Miner Union vs. Kudremukh Iron Ore Co. Ltd [2], it was observed that the employees are supposed to serve a notice before going on strike and the said notice should specify the date on which they intend to strike. If the said date has elapsed, the employees are supposed to come up with a new strike notice.

General Prohibition on Strike:

This restriction on strikes is applicable under certain specific conditions as contemplated by Section 23 of the Industrial Disputes Act. These circumstances are: 

  • During the pendency of conciliation proceedings before a board and till the expiry of 7 days after the conclusion of such proceedings;

  • During the pendency and 2 months after the conclusion of proceedings before a Labour Court, Tribunal or National Tribunal;

  • During the pendency and 2 months after the conclusion of the arbitrator, when a notification has been issued under subsection 3 (A) of section 10 A;

  • During any period in which a settlement or award is in operation in respect of any of the matters covered by the settlement or award

The major objective of this section seems to be the amicable settlement of industrial disputes.

Illegal Strike:

We have already come across situations where a strike could be legal, as per sections 22 and 23 of the Industrial Disputes Act. A strike in contravention of the provisions mentioned above is illegal. If a strike is continued on contravention of an order made under subsection (3) of section 10 or subsection (4-A) of section 10-A, it will be an illegal strike.

Further, 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 subsection (3) of section 10 or subsection (4-A) of 10-A. A strike declared in consequence of an illegal lock-out shall not be deemed to be illegal.

It is pertinent to note that, as observed in relevant cases, striking employees are entitled to remuneration only if the said strike is legal. An award for compensation for loss of business could be granted by the courts against illegal strikers. As per the act, illegal strikers can get imprisonment up to one month or a fine or both. 

Lockouts

In simple words, lockouts could be told off as the strikes of the employer. This is retaliation by the employer to clashes with employees. A lockout is a temporary shutdown of an establishment which would temporarily deprive the workers of their jobs and hence their incomes. This could effectively force the workers to concede to the demands of the employer owing to the need of work and remuneration. Even in this case, there are restrictions and general prohibitions. 

What does a lockout mean under the Act?

The Act defines lockouts 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 second part of the definition makes it clear that a lockout need not be a blanket suspension of work on every employee. Hence, the employer might as well employ certain workers while others are locked out. It is pertinent to note that this is different from a layoff. 

Further Read: Need for Corporate Governance

Legal Lockout:

If a lockout is supposed to be deemed legal, it has to necessarily comply with certain prerequisites as defined under the act. These are:

  • There should be some demand for which industrial establishment is locked out

  • The temporary closing of a place of employment/undertaking. The permanent closure does not constitute lockout

  • Intention to re-open or take the worker back if they accept the demand must exist

  • The employer and employees must be engaged in an industrial process carried out in an institution falling within the meaning of industry as defined in section 2(J)

Illegal Strike:

The provisions dealing with the legality of lockouts are as defined under section 22, 23 and 24 of the Industrial Dispute Act. Section 24 states that a strike shall be illegal in the following circumstances:

  • The Employer has not served a valid notice within the period prescribed by the section before a Lockout, as per section 22

  • Lockouts are prohibited, in case, the matter under dispute pending before the arbitrator, Board of Conciliation, Labor Court, Labor Tribunal or during any period in which settlement or award is in operation, in respect of any of the matters covered by the settlement or the award, as per section 23 

  • A Lockout shall be illegal if it is continued in contravention of an order and by the appropriate government under Section 10(3) or under subsection 4(a) of Section 10-A of the said Act

Illegal Lockouts can get the employer an imprisonment up to one month or a fine or both. This becomes applicable once the employer commences the illegal lockout.

 

External Links:

[1] Right to Strike as a Fundamental Right: A case study of T.K. Rangarajan vs Government Of Tamil Nadu & Others

[2] An Analysis of Workmen’s Right to Strike: A case study of Mineral Miners' Union vs Kudremukh Iron Ore Co. Ltd. on 26 August, 1988

 

Written by: Jesse Jacob V

Reviewed by:
Antim Amlan
Associate - Legal, MyAdvo Techserve Pvt. Ltd.
Published on 27th Jun, 2019
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Antim Amlan is an expert corporate lawyer for MyAdvo who has experience of working with many renowned companies and firms, including Orbit Law Services, Vodafone India Ltd, Dave & Girish & Co., Lex Protector, Mehta & Kapoors.

He finished his BA LLB(Hons.) from National Law University Odisha, Cuttack. He maintains a blog wherein he wrote on company law, securities law, banking, and finance.

LinkedIn: https://www.linkedin.com/in/antimamlan

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