LABOR CODE-

MANAGEMENT
PREROGATIVES
MANAGEMENT PREROGATIVES
A RIGHT, POWER OR PRIVILEGE
ACKNOWLEDGE TO BUSINESS
OWNERS
MANAGEMENT
PREROGATIVES
TO LAY DOWN AND EXECUTE MANAGEMENT
POLICIES
TO HIRE
TO TRANSFER
TO DISCIPLINE
TO DISMISS
RETRENCHMENT
REDUNDDANCY
TO CEASE OPERATIONS
TO SELL THE COMPANY
TO ABOLISH POSITIONS
RIGHT TO LAY DOWN AND
EXECUTE MANAGMEMENT
POLICIES
Establish Working Hours, and to Organize
andReorganizeIn general terms, an employer is free to
regulate, accordingto his own discretion and judgment, all
aspects ofemployment, including work assignments,
workingmethods, time, place and the manner or work,
tools to beused, processes to be followed, supervision of
workers andworking regulations. (SMC Sales vs Ople,
GR No. 53515,Feb. 8, 1989)
RIGHT TO HIRE
The company has the exclusive right to purchase labor from
any person whom it chooses.
Thus, the transferee in good faith of a business establishment
has no obligation to absorb employees of the transferor and to
continue on employing them. (MDII Employees Association vs
Presidential Assistant on Legal Affairs, 79 SCRA 40)
There is no law which requires the purchaser to absorb the
employees of the selling corporation. As there is no such law,
the most that the purchasing company may do, for purposes of
public policy and social justice, is to give preference to the
qualified separated employees of the selling company, who in
their judgment are necessary in the continued operation of the
business establishment.

RIGHT TO TRANSFER
The company has the right to transfer an employee from
one office to another within the business establishment
provided that there is no demotion in rank, salary,
benefits and other privileges. This is a privilege inherent
in the employers right to control and conduct its business
enterprise and conduct of its business operations to
achieve its purpose. It cannot be denied to the employer.
IT is the employers prerogative, based on its assessment on the following employee
attributes: Qualifications Aptitudes Competence An employees security of tenure does
not give him such a vested right in his position as would deprive the company of its
prerogative to change his assignment or transfer him where he will be most useful. When
the EEs transfer is not unreasonable, nor inconvenient, nor prejudicial to him, and it does
not involve a demotion in rank or diminution in salaries, benefits and privileges, the
employee may not complain that it amounts to constructive dismissal. (PT&T vs NLRC, GR
NO. 76645, July 23, 1991; Allied Bank vs CA, GR No. 144412, 11/18/03)
Transfer of employees
The transfer of an employee ordinarily lies within the ambit of
management prerogatives. However, managerial prerogative to transfer personnel
must be exercised without grave abuse of discretion, putting to mind the basic
elements of justice and fair play (Castillo vs. NLRC 1999). Having the right
should not be confused with the manner by which such right is to be exercised
(Paguio vs. PLDT 2002). It cannot be used a subterfuge by the employer to rid
himself of an undesirable worker (Castillo vs. NLRC 1999).

RIGHT TO DISCIPLINE
The right of the employer to subject his employees to disciplinary
measures and the need for discipline have been judicially noticed.
Success in industries and public services is the foundation in which just
wages may be paid. There can be no success without efficiency. There
can be no efficiency without discipline. Thus, when they violate the rules
of discipline, employees and laborers jeopardize the interest not only of
the employer but also of their own. In violating the rules of discipline,
they aim at killing the hen that lays golden eggs. Laborers who trample
down the rules set for an efficient service are, in effect, parties to a
conspiracy against not only to capital but also to labor.The employer has
the right to instill disciplinein his employees and to impose reasonable
penalties on erring employees pursuant to company rules and
regulations. (SMC vs NLRC, GR No. 87277, May 12, 1989)IF the
undesirable one remains in service, it will demoralize the other
employees (Shoemart vs NLRC Gr No. 74229, 8/11/1989)
RIGHT TO DISMISS
The company has the right to dismiss employees in
accordance with the causes and procedures established by
law. This particular right must be exercised with
CAUTION and without abuse of discretion because
termination affects the right of the worker to Security of
Tenure. Art. 279 in cases of Regular Employment,
termination on the grounds of just and authorized causes,
subject to the requirements of due process.
End of contract? Completion of contract/phase? No
prior notice is required. Termination of probationary
employment? Notice served on employee within a
reasonable time Any decision of termination shall be
without prejudice to the right of the worker to contest the
same by filing a complaint with the RAB of the NLRC.
Validity of 30 day preventive suspensions.
RIGHT TO RETRENCHMENT
Exists during the period of business recession, industrial depression, or seasonal
fluctuations
Retrenchment is a management prerogative, a means to protect and preserve the
employer's viability and ensure his survival.
1
It is one of the economic grounds
to dismiss an employee resorted to by an employer primarily to avoid or
minimize business losses.
2
In this regard, the employer bears the burden to prove
his allegation of economic or business reverses,
3
otherwise, it necessarily means
that the dismissal of an employee was not justified.
4

We apply this precept in the present case where herein private
respondents,
5
employees of petitioner Polymart Paper Industries, Inc. (Polymart),
were dismissed on July 4, 1992 on the ground of retrenchment.
Retrenchment is something akin to downsizing. When a company or government
goes through retrenchment, it reduces outgoing money or expenditures or
redirects focus in an attempt to become more financially solvent. Many
companies that are being pressured by stockholders or have had flagging profit
reports may resort to retrenchment to shore up their operations and make them
more profitable. Although retrenchment is most often used in countries
throughout the world to refer to layoffs, it can also label the more general tactic
of cutting back and downsizing.

RIGHT TO REDUNDANCY
Exists where the services of an employee are in excess of what is reasonably
demanded by the actual requirements of the enterprise

Redundancy is one of the authorized causes for termination of
employment. Under Article 283 of the Labor Code, employees should be given
separation pay of one (1) month pay per year of service in case of termination on
the ground of redundancy.

The Court affirmed the termination of employment due to redundancy in
several instances. In the case of De Ocampo vs. NLRC (cf. Serrano vs. NLRC
2000) the Court upheld the termination of employment of three (3) mechanics in
a
transportation company and their replacement by a company rendering
maintenance and repair services, as follows:
RIGHT TO CEASE
OPERATIONS
In any case, Article 283 of the Labor Code is clear that an
employer may close or cease his business operations or
undertaking even if he is not suffering from serious
business losses or financial reverses, as long as he pays
his employees their termination pay in the amount
corresponding to their length of service. It would indeed
be stretching the intent and spirit of the law if we were to
unjustly interfere in managements prerogative to close or
cease its business operations just because said business
operations or undertaking is not suffering from any loss.
ARTICLE 283. Closure of establishment and reduction of
personnel. The employer may also terminate the employment
of any employee due to the installation of labor saving devices,
redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking
unless the closing is for the purpose of circumventing the
provisions of this Title, by serving a written notice on the
workers at least one (1) month before the intended date
thereof The purpose of the notice requirement is to enable
the proper authorities to determine, after hearing, whether such
closure is in good faith, i.e., for bona fide business reasons
(Complex Electronics Employees Association vs. NLRC
1999).
RIGHT TO SELL THE
COMPANY

RIGHT TO ABOLISH
POSITIONS
Installation of labor saving devices
The law authorizes an employer to terminate employment due to the
installation of labor saving devices. The courts will not interfere with the exercise
of this management prerogative in the absence of abuse of discretion,
arbitrariness
or maliciousness. However, the employer is also required to furnish a written
notice of the intended termination to the employee and to the Department of
Labor and Employment at least one (1) month before the intended date of
termination. This is to enable the affected employee to contest the reality or good
faith character of the asserted ground for the termination of his services before the
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