This clause outlines the obligations and rights of both parties when a strike or labor action occurs that affects the business. It typically specifies whether the company can hire replacement workers, whether the contract remains in force during a strike, and what happens to service levels, delivery schedules, or performance obligations. The clause may also address whether the striking party remains liable for breach of contract or whether strike-related non-performance is excused. This matters significantly because strikes can severely disrupt operations, and without clear contractual language, disputes can arise about whether a party is in breach, whether penalties apply, and whether the contract survives the labor action.
The clause is particularly important in industries with unionized workforces or strong labor organizing traditions. It creates certainty about what "business as usual" looks like during labor disruptions and protects both the employer's ability to continue operations and the employees' right to strike without automatically triggering contract termination or massive liability. However, poorly drafted clauses can either unfairly restrict a company's ability to operate during a strike or can be viewed as anti-union and create legal exposure under labor law.
Ensure the clause distinguishes between strikes by your own employees versus strikes by supplier or customer employees that indirectly affect you. For strikes involving your own workforce, clearly state whether replacement workers can be hired, under what conditions, and for how long. Include language that the company will attempt to minimize disruption and that the strike does not automatically excuse all performance obligations—only those directly impossible to perform due to the strike. If you are representing employees or unions, negotiate for protections against permanent replacement of strikers and ensure the clause doesn't penalize workers for exercising their legal right to strike. Consider adding a requirement for good-faith negotiation to resolve the underlying labor dispute within a specified timeframe.
Frequently Asked Questions
What does this clause mean in simple terms?
This clause outlines the obligations and rights of both parties when a strike or labor action occurs that affects the business.
Why should I care about this clause?
It typically specifies whether the company can hire replacement workers, whether the contract remains in force during a strike, and what happens to service levels, delivery schedules, or performance obligations.
What are my options?
The clause may also address whether the striking party remains liable for breach of contract or whether strike-related non-performance is excused.
How does this affect small businesses?
This matters significantly because strikes can severely disrupt operations, and without clear contractual language, disputes can arise about whether a party is in breach, whether penalties apply, and whether the contract survives the labor action.