Management

Prerogatives
2.1 Management

MANAGEMENT is any person or entity

doing business for profit, with the use of
labor and capital.  

MANAGEMENT PREROGATIVES are the

rights and privileges of decision and action
flowing from managerial control – embraces
all aspects of the business.

Department of Labor & Employment

2.1 Management

Two aspects:

1. Operational Aspect – which means the

freedom of the employer to direct the
operations of its business as it sees fit; and

2. Personnel Aspect – which means the

freedom to prescribe policies and rules
regarding personnel actions, discipline
and organization, including the right to
HIRE and FIRE.
Department of Labor & Employment
2.2 Nature of Management Prerogatives

- Except as limited by special laws, an

employer is free to regulate, according to
his own discretion and judgment, all
aspects of employment.

- The exercise of management prerogatives

is discretionary.

Department of Labor & Employment

 2.3 Management Prerogative:
Operational Aspect

THE RIGHT TO:

• Impose reasonable conditions for hiring

• Determine the size of the workforce.
• Reasonable returns of investment and to
expansion and growth.
• Contract out the performance of some of its
jobs or services.

Department of Labor & Employment

 2.3 Management Prerogative:
Operational Aspect
THE RIGHT TO:

• Reduce his personnel or close his

establishment in the following cases:
• Introduction of labor-saving devices results in redundancy;
• Retrenchment is necessary to prevent losses or cessation of
operation of the establishment; and
• Total closure is justified due to substantial losses in business
operations.

• Suspend business operations in case of

natural calamities that hit the area of
operations.
Department of Labor & Employment
 2.3 Management Prerogative:
Personnel Aspect

THE RIGHT TO:

 Hire  Determine working

 Fire structures
 Transfer  Determine time,
 Promote place, manner of
work
 Lay-off
 Supervise workers
 Lay down policies
 Regulate Work
 Discipline
 Undertake other mgt
 Determine work actions
assignment
Department of Labor & Employment
 2.3 Management Prerogatives

The exercise of management prerogatives must

be:
1. Without abuse of discretion;
2. Tempered with compassion and
understanding;
3. Exercised humanely;
4. If a penalty, it must be just and commensurate
with the offense committed by the
employee
Department of Labor & Employment
Management’s Obligations/Responsibilities
Management’s
Obligations/Responsibilities
1.  The policies should not be contrary to law, public
order and public policies and are not enforced
with grave abuse of discretion.
2. Pay workers according to the minimum wage
law or contract. In case of contract, it should not
be below the minimum set by law.
3. Observe labor standards laws & social
legislations.
4. Provide workers with just and humane (safe and
healthful) conditions of work.
Department of Labor & Employment
Management’s
Obligations/Responsibilities
5. Inform workers of the company personnel policies
and disciplinary measures then enforce in case of
violation provided due process is accorded.
6. Re-assignment or transfer should not result in
diminution of benefits, loss of seniority rights or
unfair labor practice or should not constitute
union busting.
7. Termination on authorized or just causes only after
complying with notice/procedural due process.
8. Establish a productivity incentive program. 

Department of Labor & Employment

 Management’s
Obligations/Responsibilities
LABOR STANDARDS
 RETIREMENT PAY
 OVERTIME PAY
 NIGHT DIFFERENTIAL  PATERNITY &
 HOLIDAY PAY MATERNITY LEAVES
 SERVICE INCENTIVE  LIMITS ON
LEAVE EMPLOYMENT OF
 MINIMUM WAGE WOMEN & MINORS
 13TH MONTH PAY
 SEXUAL HARASSMENT
 WEEKLY REST PERIODS
RULES
 MEAL & REST
 OCCUPATIONAL
PERIODS
HEALTH AND SAFETY
RULES
Department of Labor & Employment
 Management’s
Obligations/Responsibilities
New Labor Standards Enforcement
Approaches:
Self-Assessment
(200+ or less but with certified SEBA &
CBA)

Routine Inspection
(10-199)

Technical Advisory Visits

(TAV) (less than 10 & BMBEs)

Department of Labor & Employment