Lockout: An employer’s ‘right to strike’

If industrial relations turn sour, you always have the weapon of a lockout on hand – but ANDREW DOUGLAS warns that it is not a piece of IR ordnance that should be shot from the hip.

By Andrew Douglas

If industrial relations turn sour, you always have the weapon of a lockout on hand – but it is not a piece of IR ordnance that should be shot from the hip.

I recently acted for a business that was worn down by repeated stoppages and threats of industrial action by its employees and their union.

Its customers were complaining, its sales staff were frustrated and its employees felt the company wasn’t listening.

What did the company do? It reached for its tactical nuclear weapon – the only weapon in its arsenal that was guaranteed to go off with a bang; the lockout.

An employer can lockout its employees without pay by giving three days notice once a bargaining period commences, or immediately, on notice, in response to the start of union industrial action.

The latter is the usual approach as it catches employees by surprise and hits home in their back pocket. Most employees can afford one day’s lost pay per fortnight for a short period, but very few can survive a two to four week lockout, particularly if they have no capacity to prepare for it and no overtime is offered upon their return for wage catch up.

Like the nuclear threat in the cold war, the lockout is inclined to bring with it a risk of mutual destruction. That is because once you hurt your employees financially, you hurt their family. And if you hurt someone’s pride and their family, they will hurt you.

The lockout demonstrates a willingness to injure employees and their families to achieve an industrial gain. In effect, you jump into the industrial punishment pit of the union, and after that some mud will stick – the very same mud you have been slinging at the union.

Unquestionably there is a place for lockouts. When you have been fair and reasonable and the union response is violent and unreasonable, the circumstances are ripe. But it is critical your employees understand the lockout has occurred because of their or their union’s unacceptable behaviour.

The company’s actions throughout the dispute must be ethical, fair, reasonable and transparent. Only then does the lockout teach the lesson.

On any other occasion it breaches the fundamental trust employers seek to establish with their employees. If your behaviour starts to reflect the union behaviour you complain of, very quickly the battlefield spirals out of control.

Bernard Baruch, speaking at the UN in 1946 in the aftermath of WWII, said the following two things when proposing the control of nuclear weapons:

1. “Better pain as the price of peace than death as the price of war.”
2. “The terror created by weapons has never stopped man from employing them!”

The business cost of a lockout is readily measured in staff dissatisfaction, retention problems, waste, production loss and the development of a yawning gap between management and employees. It is rarely the right response. The way around industrial action by unions involves:

• Proper communication with employees with a reasonable, fair and transparent bargain and offer.
• Contingency planning, so irrespective of union action customers are served on time.
• Open communication with customers about the industrial dispute so they trust your brand.

People respect fairness, but resent bullies. A successful lockout that extracts the best collective agreement for the employer can come at a terrible cost to the business.

Choose your weapons carefully! Your best weapon is always integrity.

Your best industrial tools are patience, integrity, sincerity and transparency.

If you must drop the bomb, the victim must understand they deserve it to minimise the prospect of subsequent revenge.

Andrew Douglas is the founder, principal lawyer and managing director of Douglas Workplace & Litigation Lawyers. Andrew is an experienced commercial litigation and workplace lawyer, who acts both as a solicitor and advocate.

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