Management

Prerogative
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Concepts of Prerogative
Management
“
Under the doctrine of management prerogative,
every employer has the inherent right to regulate,
according to his own discretion and judgment, all
aspects of employment, including hiring, work
assignments, working methods, the time, place
and manner of dismissal, and recall of employees.

-Rural Bank of Cantilan, Inc. v. Julve, G.R.

No. 169750. 27 February 2007

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“
As a privilege inherent in the employer’s
right to control and manage its enterprise
effectively, its freedom to conduct its
business operations to achieve its purpose
cannot be denied.

-Peckson v. Robinsons Supermarket

Corporation, G.R. No. 198534, 03 July
2013

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“
Management prerogative are not magic
words uttered by an employer to bring him
to a realm where our labor laws cannot
reach.

- SPI Technologies, Inc. v. Mapua, G.R. No.

191154 07 April 2014

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 The only limitations to the exercise of this
prerogative are those imposed by labor

“
laws and the principles of equity and
substantial justice. The policies, rules, and
regulations on work-related activities of the
employees must always be fair and
reasonable, and the corresponding
penalties in enforcing discipline in the
workplace must be commensurate to the
offense involved and to the degree of the
infraction.

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Rights of the Management
￮ It is important to know that management also has
rights that need to be respected. Said rights are:

► Right to Return of Investments

► The Right to Prescribe Rules
► The Right to Select Employees
► The Right to Transfer or Discharge Employees

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Right to Return of Investments
￮ The employer has the right to recover his investments and to
make profit.

￮ It is profit that creates jobs and improves the workers’ lot.

￮ The Constitution provides that the State shall regulate the

relations between workers and employers, recognizing the right
not only of labor to its just share in the fruits of production, but
also the right of enterprises to reasonable returns on
investments, and to expansion and growth

[See: Azucena, Labor Code with Comments and Cases, Vol. I, 2004].
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The Right to Prescribe Rules
￮ Employers have the right to make reasonable rules
and regulations for the government of their
employees, and when employees, with knowledge
of an established rule, enter the service, the rule
becomes part of the contract of employment.

[See: Ibid, citing G.R. No. 121004].

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The Right to Select Employees
￮ An employer has a right to select his employees and to decide
when to engage them.

￮ The State has no right to interfere in a private employment and

stipulate for the parties the terms of the services to be rendered.

￮ Not even the government may interfere with the liberty of

employers to stipulate with its employees the employment
terms and conditions except in the exercise of its regulatory
power.

[See: Ibid, citing G.R. No. 121004]. 10

The Right to Select Employees
￮ If the employer can compel the employee to work against the
latter’s will, this is servitude.

￮ If the employee can compel the employer to give him work

against the employer’s will, this is oppression

[See: Ibid].

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Right to Transfer or Discharge
Employees
￮ The employer has the right to transfer, reduce or lay off
personnel in order to minimize expenses and to insure the
stability of the business. It may even decide to close the
business, provided that the resulting transfers or dismissals are
done in good faith and are due to causes beyond control. To
hold otherwise would be oppressive and inhuman.

[See: G.R. No. L-6846].

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Main Limitations to
Management Prerogative
 Good faith
 Employee Rights

Thus, for management prerogative to be validly

exercised, these limitations should be observed. If they
are not complied, then there may be a finding of a labor
law violation.

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Labor standards as limitation to
management prerogative
Labor standards refer to the minimum requirements prescribed
by existing laws, rules, and regulations relating to wages, hours
of work, cost of living allowance and other monetary and
welfare benefits, including occupational, safety, and health
standards.

[See: G.R. No. 78909]

The parties may stipulate the terms and conditions of

employment, but such terms should never go below the
standards prescribed by law. The parties, though, are not
prohibited to stipulate terms above the minimum.

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Labor standards as limitation to
management prerogative
The relations between the employer and the
employee are not merely contractual. They are so
impressed with public interest that labor contracts
must yield to the common good. Therefore, such
contracts are subject to the special laws on labor
unions, collective bargaining, strikes and lockouts,
closed shop, wages, working conditions, hours of
labor and similar subjects

[See: Art. 1700, Civil Code].

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Rules on fairness as limitation to
management prerogative
Also, employers cannot justify discrimination by claiming that it
was merely exercising its prerogatives. Though the employer’s
right to terminate employees on account of retrenchment to prevent
losses or closure of business operations is recognized by law, it
cannot justify unequal payment of separation benefits by simply
claiming that it is their prerogative as employers

Management prerogatives are not absolute prerogatives but are

subject to legal limits, collective bargaining agreements, or general
principles of fair play and justice

[See: G.R. No. 103575].

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Rules on fairness as limitation to
management prerogative
Given the foregoing, it is clear that while labor laws protect
the welfare of the workers, interference with an employer’s
judgment in the conduct of his business is likewise
discouraged. As long as the employer’s exercise of its
prerogatives is in good faith to advance its interests and not
for the purpose of defeating or circumventing the rights of
employees under the laws or valid agreements, then such
exercise will be upheld.

[See: G.R. No. 106256]

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Credits
https://www.laborlaw.ph/legal/management-prerogative-employers-bundle-of-rights?
fbclid=IwAR3ol2YCijvtc9A4uXHvzvWE4e_dKl_d4uA9wFSiRHYUfn0A4QuMYrYUo
X0#:~:text=Management%20prerogative%20is%20the%20inherent,and%20(b)
%20employee%20rights

https://www.alburolaw.com/management-prerogative-rights-employers

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Thank you!
Any questions?