LIMITATIONS OF MANAGEMENT PREROGATIVES
As a matter of general principle, the Court upholds these 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 and valid agreements.
As long as the company’s exercise of management prerogatives 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.
These management prerogatives are subject to certain limitations which may be imposed by law or by the Collective Bargaining Agreement (CBA), employment contract, employer policy or practice and general principles of fair play and justice.
There is no doubt now that the management has the prerogative to discipline its employees and to impose appropriate penalties on erring workers pursuant to company rules and regulations.
Provided that the exercise of these prerogatives is not tainted with abuse of discretion, bad faith and whims of employer. Such act should only be impelled by the desire to carryout business interest in good faith.
In formulating the company’s Code of Discipline here in the Philippines, both management prerogatives and security of tenure have to be taken into consideration.
(See Discussion in the book How to Design and Formulate Company Code of Discipline, pp. 14-15)
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