Employee’s rights vs. Employer’s Prerogative Part 2
In the previous post, the rights of employees were discussed as provided in Article 279 [now Article 294 as renumbered per R.A. 10151 and DA 01, Series of 2015] of the Labor Code, as amended. Basically, these rights include not to be dismissed without cause, due process, etc.
Get a re-numbered copy of Labor Code
Also, the right to benefits, compensation, and other emoluments provided by law.
Of course, these rights are not absolute. On the other side there are rights of the employer. Does this mean that to uphold the right of one means to extinguish that of the other? Is this zero-sum situation?
No. This is where the perfect balance should be established because labor and capital are important factors in business. There is no progress without these components.
The post below is based on the book Guide to Valid Dismissal of Employees (pp. 13-16)
II. MANAGEMENT PREROGATIVES
The reason behind every business is to earn profits. In pursuit of such goal, the employer hires employees to conduct its business. But at the end of the day, companies may do everything within their power to succeed in business even if it would mean terminating employees’ services in order to survive.
The State respects the doctrine of management prerogative or the company’s business judgment although subject to certain limitations. In an employer-employee setup, it takes two to tango, so to speak. So the employer and the employee are two sides of the same coin.
Employees are integral part of employer’s success in business, while the employer is a source of income for the employees. It is just wise then to exert utmost effort to achieve a perfect balance between these two significant forces of business.
The law cannot uphold the rights of the worker to the demise of the employer. Conversely, the law cannot allow business enterprises to flourish at the expense of the abused and exploited workers. While the State affords the constitutional blanket of rendering protection to labor, it must also protect the right of employers to exercise what are clearly management prerogatives, so long as the exercise is without abuse of discretion.
Our laws recognize and respect the exercise by management of certain rights and prerogatives. For this reason, courts often decline to interfere in legitimate business decisions of employers. In fact, labor laws discourage interference in employers’ judgment concerning the conduct of their business.
Management prerogatives, as the Supreme Court puts it, allow employer to “regulate, generally without restraint, according to its own discretion and judgment, every aspect of its business.”
It is recognized that company policies and regulations, unless shown to be grossly oppressive or contrary to law, are generally valid and binding on the parties and must be complied with until finally revised or amended, unilaterally or preferably through negotiation, by competent authority.
The High Court almost always upholds a company’s management prerogatives so long as they are exercised in good faith for the advancement of the employer’s interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements.
The exercise of management prerogative is subject to the limitations imposed by law or by the Collective Bargaining Agreement (CBA), employment contract, employer policy or practice and general principles of fair play and justice.
While the courts recognize management’s prerogative to discipline its employees, the exercise of this prerogative. should at all times be reasonable and should be tempered with compassion and understanding. According to the Court, the exercise of that prerogative must be made without abuse of discretion, for what is at stake is not only the employee’s position but also his means of livelihood.
Courts look into the employer’s exercise of a management prerogative if the same is clearly shown to be tainted with grave abuse of discretion, ever mindful that, under the foregoing principles and the policy of the State, doubts should be resolved in favor of the disadvantaged employee.
Even as the law is solicitous of the welfare of employees, it must also protect the right of an employer to exercise what are clearly management prerogatives. As long as the company’s exercise of the same is in good faith in order to advance its interests and not for the purpose of defeating or circumventing the rights of the employees under the law or valid agreements, such exercise will be upheld.
Specific instances of management prerogatives
The Supreme Court has already ruled on the validity of the employer’s exercise of the following management prerogatives:
1. Right to transfer workers
2. Right to re-assign workers
3. Right to reorganize its business
4. Right to promote or not to promote employees
5. Right to demote employees
6. Right to discipline erring workers
7. Right to abolish and create positions
8. Right to dismiss employees
9. Right to prescribe working methods, time, place, manner and other aspects of work.
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