Charles Fields, a 23-year employe of the Madison Hotel, reported to work at 7 a.m. on Monday prepared for another day working as a maintenance engineer, repairing and servicing plumbing and other equipment at the 369-room luxury hotel at 15th and M streets NW.

But Fields said he was told by superiors there was no need to punch the time clock because he no longer was employed by the Madison. Instead, Fields and seven other building engineers were told, the Madison had hired a contracting firm to take over its building service.

"They told me if I wanted to work for the new firm , I would have to work without the union contract," said Fields, a member of Local 99 of the International Union of Operating Engineers. "I told them I wouldn't work for them without the union."

The union, which for 20 years has represented engineers who run heating and air-conditioning systems, yesterday began picketing the Madison, accusing the hotel of violating labor law and "locking out" union members, a charge that management strenuously denied. The union filed charges against the hotel at the National Labor Relations Board in Baltimore.

The dispute revolves around "contracting out," a growing practice among employers in unionized work places who seek to cut costs by hiring outside firms that often cut jobs or reduce pay and benefits.

"Nobody took their jobs away from them," said Allen G. Siegel, who represents both Madison owner Marshall Coyne and the new contractor, George Thore Mechanical Contracting. The contracting firm is willing to accept the employes and the union contract but wants the right to discharge employes during a 90-day probationary period, which the union has refused, Siegel said.

"They can come back to work at any time. There is no lockout. It is a very strange situation, but I don't understand why they are calling it a lockout," he said. Siegel said Thore is willing to pay the $13 hourly wage and abide by other terms of the union contract, but that the union has chosen to stay off the job rather than negotiate on the 90-day probation proposal.

Local 99's contract with the Madison prevented subcontracting such as Thore's, according to union lawyer Jeffrey Freund. Although the union contract expired last October, with no new agreement reached, the Madison is still bound by the subcontracting ban, according to the union's NLRB complaint.

"They want to be able to fire people without reasons, and it's unfair," said Local 99 business manager Harry Chambers. He said management's strategy is aimed at "getting rid of" several union members who managers believe are incompetent or troublesome. He said the union contract allows for firing such employes, but only if managers can prove their case to an arbitrator.

If the dispute is not resolved shortly, the Hotel and Restaurant Employees union plans to ask its 250 members at the Madison to walk off their jobs, which union executive Ron Richardson said is a contractual right of the union. Richardson said the subcontracting is "obviously a scam" by the hotel.

Neither Coyne nor Thore could be reached for comment. But Siegel said the contracting out is being done "for expense reasons."