What is Management Prerogative?

 The right of an employer to regulate all aspects of employment. It gives employers the
freedom to regulate, according to their discretion and best judgment, all aspects of
employment, including work assignment, working methods, transfer of employees,
discipline, dismissal of workers.

What are the rights of the employers?

 The State recognizes the indispensable role of the private sector, encourages private
enterprise, and provides incentives to needed investments.

Management Prerogatives PROPER:

Prerogative to Discipline - Management has the prerogative to discipline its employees
and to impose appropriate penalties on erring workers pursuant to company rules and
regulations. It includes the Right to discipline, Right to dismiss, Right to determine who to
punish, Right to promulgate rules and regulations, Right to impose penalty, Right to choose
which penalty to impose, Right to impose heavier penalty than what the company rules
prescribe.

SAGALES v. RUSTAN'S: FACTS: Julito Sagales was dismissed due to the alleged
qualified theft when he took out a plastic bag that contained 1.335 kilos of scrap
squid heads worth P50.00 from the kitchen of Rustan’s Supermarket without
paying the same.
ISSUE: Was the dismissal valid?
RULING: The penalty must be commensurate with the act, conduct or omission
imputed to the employee and must be imposed in connection with the disciplinary
authority of the employer. In this case, the petitioner deserves compassion more
than condemnation. It was shown that he had worked hard for more than 31
years evidence by the numerous awards he received from the respondent. The
squid heads were considered scrap goods valued at P50.00 which is negligible and
the respondent practically did not lose anything. His suspension for one month is
already a commensurate punishment for the infraction.

Transfer of Employees - The employer has the right to transfer or assign employees from
one area of operation to another, or one office to another or in pursuit of its legitimate
business interest.
A transfer means a movement:
a. from one position to another of equivalent rank, level or salary, without a break in
the service; or
b. from one office to another within the same business establishment

There is no demotion in rank or diminution of salary, benefits and other privileges and not
motivated by discrimination or made in bad faith, or effected as a form of punishment or
demotion without sufficient cause.

The requirement of obtaining consent from the employee involved before he can be
transferred, i.e. if the employee is: A supervisory employee: no need for consent; A rank-
and-file employee: need for prior consent.

According to Abbot Laboratories (Phils.), Inc. vs National Labor Relations

Commission, the employee who has consented to the company’s policy of hiring
sales staff willing to be assigned anywhere in the Philippines as demanded by the
employer’s business has no reason to disobey the transfer order of management.
Verily, the right of the employee to security of tenure does not give her a vested right
to her position as to deprive management of its authority to transfer or re-assign her
where she will be most useful.”

Contracting An arrangement whereby a principal agrees to farm out to a contractor the

performance or completion of a specific job or work within a definite or predetermined
period, regardless of whether such job or work is to be performed or completed within or
outside the premises of the principal. Contracting or subcontracting is a valid management
prerogative, what is prohibited by law is the labor-only contracting.
 Aside from these requirements, all persons or entities acting as contractors must
register with the Regional Office of the DOLE where it principally operates; otherwise,
it shall be presumed engaged in labor only contracting.

Productivity Standard: Depending on the nature of business, companies may impose

productivity quotas, sale quotas, so long as the same can be established within reasonable
levels and standards.

The Supreme Court held that this arrangement is an allowable exercise of company
rights since an employer is entitled to impose productivity standards for its workers.
In fact, non-compliance may be visited with a penalty even more severe than
demotion.

Grant of Bonuses and Allowances

As a general rule, the giving of a bonus and allowances is not a demandable right of an
employee. It is a benefit given ex-gratia by an employer because the latter recognizes the
efforts given by his employees which ultimately generated the increase in the profits earned
by the employer. It depends on the will of the employer. It is a privilege, not a right.

However, there are exceptions to the afore-stated general rule. The granting of a bonus may
become a right of an employee that can be demanded and enforced against the employer
under any of the following circumstances: 1. When it is stipulated in an employment
contract or Collective Bargaining Agreement (CBA); 2. When the grant of bonus is a
company policy or practice; or 3. When it is granted as an additional compensation which
the employer agreed to give without any condition such as the success of business or more
efficient or more productive operation, and thus, must be deemed part of the wage or
salary.

Exception to the exception: Even if the grant of bonus has been a vested right of the
employee, the employer may refuse to give such bonus if he suffers from financial distress
and has insufficient budget to defray the bonus expense.

Exception to the exception to the exception: When the employer, despite knowledge of his
financial difficulties, still entered into an agreement with the employees to grant the bonus.
(Eastern Telecommunications v. Eastern Telecoms Employees Union, 2012)

Change of Working Hours: Employers have the freedom and prerogative, according to their
discretion and best judgment, to regulate and control the time when workers should report
for work and perform their respective functions. It includes prerogative to determine work
schedules, assignments of employees, and determine places of assignments.

The general rule is that an employer cannot unilaterally reduce working hours of the
employee. The only exception is upon the existence of a situation where the employer
has to address a more efficient economic operation of the business, the employer may
unilaterally reduce it.

“In the reduction of workdays, it is required that the employer should notify DOLE of
the reduction of workdays prior to its implementation (Intec Cebu v. CA, GR
189951, 2016)

Marital Discrimination: The employer has the prerogative to establish a policy on

marriage provided that it is within the definitive standards recognized and established by
jurisprudence.
CAPIN CADIZ CASE: FACTS: Petitioner was a Human Resource Officer of
respondent. She was suspended due to Unprofessionalism and Unethical Behavior
Resulting to Unwed Pregnancy for she became pregnant out of wedlock. The
 condition of the respondent for the lifting of Cadiz’ suspension is for her to marry her
boyfriend.
ISSUE: Was the institution’s condition for petitioner’s reinstatement amounts to
marital discrimination?

RULING: Brent’s condition of marriage for reinstatement of Cadiz amounts to marital

discrimination.
Article 136 of the Labor Code provides that it is unlawful for an employer to require
as a condition of employment or continuation of employment that a woman employee
shall not get married, or to stipulate expressly or tacitly that upon getting married, a
woman employee shall be deemed resigned or separated, or to actually dismiss,
discharge, discriminate or otherwise prejudice a woman employee merely by reason
of her marriage. Also, the Magna Carta of Women mandates that women have the
right to choose freely a spouse and to enter into marriage only with their free and full
consent. In the present case, Brent’s condition is apparent to be coercive, oppressive,
and discriminatory. It forces Cadiz to marry for economic reasons and deprives her of
her freedom to choose her status, which is a privilege that inheres in her as
intangible and inalienable right.
SANTOS LEUS CASE: SCCW is a catholic and sectarian educational institution
Petitioner was hired as an Assistance to SCCW’s Director. When SCCW learned
petitioner’s pregnancy, she was advised to file her resignation which she refused. She
was then dismissed for engaging in premarital sexual relations and getting pregnant
as a result thereof which SSCW explained that amounts to serious misconduct or
conduct unbecoming of an employee.
RULING: The Supreme Court ruled that that the petitioner’s pregnancy out of
wedlock is not a disgraceful or immoral conduct, hence, not a valid ground to
terminate her employment. When the law speaks of immoral or, necessarily,
disgraceful conduct, it pertains to public and secular morality; it refers to those
conducts which are proscribed because they are detrimental to conditions upon
which depend the existence and progress of human society.

BFOQ: General Rule: Employment in particular jobs may not be limited to persons of a
particular sex, religion, or national origin unless the employer can show that sex, religion,
or national origin is an actual qualification for performing the job. Exception: The exception
is called a bona fide occupational qualification (BFOQ)
Yrasgui Case: The test of reasonableness of the company policy is used because it is
parallel to BFOQ which is valid provided it reflects an inherent quality reasonably
necessary for satisfactory job performance. Being overweight necessarily impedes
mobility. Indeed, in an emergency situation, seconds are what cabin attendants are
dealing with, not minutes. Three lost seconds can translate into three lost lives.
Evacuation might slow down just because a wide-bodied cabin attendant is blocking
the narrow aisles. These possibilities are not remote.
Post- Employment Ban - The employer may insist on an agreement with the employee for
certain prohibitions to take effect after the termination of their employee-employer
relationship.
Rolando Rivera Case. The restraint may not be unduly harsh or oppressive in
curtailing the employee’s legitimate efforts to earn a livelihood and must be
reasonable in light of sound public policy.

Is this Absolute?
 No. The exercise of management prerogative is subject to the limitations imposed by
law or by CBA, employment contract, employer policy or practice and general
principles of fair play and justice. (The Philippine American Life and General
Insurance Co. vs. Gramaje, G. R. No. 156963, Nov. 11, 2004).