Lay-off v. lock-out – Management of Kairbetta Estate v. Rajamanickam AIR 1960 SC 893

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• Management of Kairbetta Estate Rajamanickam AIR 1960 SC 893 – The Supreme Court has discussed the two concepts bringing out their differences.
• lay-offs: in continuing business; lock-outs: temporary closure
• lay-offs: relates to inability to employ due to certain reasons; lock-outs: concept doesn’t relate to any specific reason
• lay-offs: compensation is payable; lock-outs: consequences flow from legality or illegality, no compensation
• Lay-offs can also result in imprisonment if the compensation / approval provisions are not followed for identified ‘industrial establishments’
• The company manager was violently attacked by             its workmen as a result of which he sustained serious  The  workers  in  the lower  division  also threatened the company staff working in that division that they would murder them if they         worked there.   The company was therefore compelled to notify that the division would be closed until further notice. Subsequently, the division was opened      again as a  result  of conciliation. The workers made a claim for lay-off compensation for the period during which the lower division   was closed on the footing that the management for their  own reasons      did not choose to run the division            during that period.
• The company’s answer was that the closure         of the division amounted to a lock-out which  under the  circumstances was perfectly justified and the workers were not entitled to claim any lay-off compensation.
• It was held that the concept of a lock-out is        essentially different  from that of a lay-off and where the            closure  of business  amounts  to  a  lock-out, it  would  be impossible to bring it within the scope  of  a lay-off. The lock-out which was justified on the facts of the  case, was not a lay-off and therefore the workmen        were not entitled to claim any lay-off compensation.
• The difference between retrenchment and closure is similar.
• Retrenchment relates to dismissal from a continuing establishment.
• Discontinuance of service on account of closure of an undertaking on the other hand is not included within the meaning of retrenchment.

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