Skip to main content

Disclaimer: Educational purposes only. Not legal advice. Consult a qualified NZ legal practitioner for your specific circumstances.

SimplifiedLaw.co.nz
employment

Lockouts by employers: When are they permitted?

Key Takeaway

In New Zealand, an employer's lockout is a form of industrial action, where employees are prevented from working to compel them to accept employment terms. Lockouts are generally lawful only when engaged in for the purpose of concluding a collective agreement and typically require specific notice. Unlawful lockouts can lead to penalties.

Understanding Lockouts by Employers in New Zealand

In New Zealand employment law, a 'lockout' refers to a specific type of industrial action taken by an employer. It involves the employer preventing employees from working as a means to pressure them, often during collective bargaining, to agree to certain terms and conditions of employment.

What is a Lockout?

A lockout is defined as the act of an employer preventing employees from working, with the intention of compelling them to accept terms and conditions of employment, or to agree to other matters affecting their employment [Source: Employment Relations Act 2000, s 4]. It is a form of 'industrial action', which broadly includes any act, omission, or state of affairs that disrupts, impedes, or otherwise affects the carrying on of any undertaking or the provision of any service [Source: Employment Relations Act 2000, s 80(1)].

When is a Lockout Lawful?

For a lockout by an employer to be lawful, it must generally meet specific criteria outlined in the Employment Relations Act 2000 (ERA). The primary condition is that the lockout must be undertaken for the purpose of concluding a collective agreement [Source: Employment Relations Act 2000, s 82(1)(a)].

Key conditions for a lawful lockout include:

  • Collective Bargaining Context: The lockout must be engaged in by an employer who is a party to an existing collective agreement or is bargaining for a new collective agreement [Source: Employment Relations Act 2000, s 82(1)(a)].
  • Proper Purpose: The purpose of the lockout must be to secure a collective agreement [Source: Employment Relations Act 2000, s 82(1)(a)].
  • Notice Requirements: In most cases, an employer must give notice of their intention to lock out employees. The specific notice period depends on the circumstances:
    • For an employer who is party to a collective agreement, at least 3 days' written notice must be given to the union before commencing a lockout. This notice must specify the nature of the proposed lockout and the employees or classes of employees intended to be locked out [Source: Employment Relations Act 2000, s 84(1), s 84(2)(c)].
    • Special rules apply to proposed lockouts in relation to a multi-employer collective agreement, requiring at least 14 days' notice [Source: Employment Relations Act 2000, s 86(1)(c)].

Unlawful Lockouts

A lockout is unlawful if it does not meet the criteria for lawful industrial action, as specified in section 82 of the ERA. This includes lockouts not engaged in for the purpose of concluding a collective agreement, or those that fail to meet the notice requirements [Source: Employment Relations Act 2000, s 83].

Additionally, there are specific prohibitions:

  • Essential Services: Lockouts are generally prohibited in essential services unless particular procedures are followed, which usually involve providing extensive advance notice (at least 14 days) to the employees and the chief executive of the Ministry of Business, Innovation and Employment (MBIE) [Source: Employment Relations Act 2000, s 85(1), s 85(2)]. Essential services are defined by regulations and include sectors vital for public health, safety, and national infrastructure.
  • Other Prohibited Purposes: Lockouts are unlawful if they are aimed at preventing workers from joining a union, or for discriminatory purposes [Source: Employment Relations Act 2000, s 104, s 105].

Engaging in an unlawful lockout can result in penalties. The Employment Relations Authority (the Authority) or the Employment Court can impose pecuniary penalties, order reinstatement, or award compensation [Source: Employment Relations Act 2000, s 135, s 137, s 138, s 139].

Employer Obligations During a Lockout

When employees are locked out by their employer in a lawful lockout, the employer is not required to pay wages or other remuneration for the period the employees are locked out [Source: Employment Relations Act 2000, s 90(1)]. This cessation of pay applies only to the period an employee is locked out and would otherwise have been working.

When to Seek Independent Legal Advice

Employers or employees facing issues related to lockouts, industrial action, or collective bargaining may benefit from independent legal advice. Information about rights and obligations can be obtained from the Employment Relations Authority, Employment New Zealand, or by contacting Community Law Centres for free advice at https://communitylaw.org.nz/.

Key Resources