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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
A “managerial employee” is one who is vested with the powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment.
All employees not falling within any of the above definitions are considered “rank-and-file employees” for purposes of labor relations.
(Chapter II, par. m, Article 212, Title I, Book Five, Labor Code of the Philippines, as amended by R.A. No. 6715)
A “managerial employee” is one who is vested with the powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees. Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of the above definitions are considered “rank-and-file employees” for purposes of labor relations. (Chapter II, par. m, Article 212, Title I, Book Five, Labor Code of the Philippines, as amended by R.A. No. 6715)
What are the characteristics of a managerial employee?
In the case of Asian Institute of Management Faculty Association (G.R. No. 207971, August 31, 2022), the Supreme Court laid down the characteristics of a managerial employee, to wit:
- He/she is not subject to rigid observance of regular office hours;
- His/her work requires the consistent exercise of discretion and judgment in its performance;
- The output produced or the result accomplished cannot be standardized in relation to a given period of time;
- He/she manages a customarily recognized department or subdivision of the establishment, customarily and regularly directing the work of other employees there;
- He/she either has the authority to hire or discharge other employees or his suggestion and recommendations as to the hiring and discharging, advancement and promotion or other change of status of other employees are given particular weight; and
- As a rule, he is not paid hourly wages nor subjected to maximum hours of work.
What is the test of managerial or supervisory status of an employee?
The test of supervisory or managerial status of an employee depends on whether such employee possesses authority to act in the interest of his employer in the manner specified in Article 212 (m) of the Labor Code and Section 1 (m) of its Implementing Rules, and whether such authority is not merely routinary or clerical in nature, but requires the use of independent judgment (Asian Institute of Management Faculty Association (G.R. No. 207971, August 31, 2022).
But why is there a need to distinguish rank-and-file employees from managerial employees?
What distinguishes managerial employees from rank and file employees is that the former act in the interest of the employer in supervising the latter.
Rank-and-file employees perform work that is routinary and clerical in nature. As held in the case of United Pepsi-Cola Supervisory Union v. Hon. Bienvenido Laguesma and Pepsi-Cola Products Philippines, Inc. (G.R. No. 122226, March 25, 1998):
“The distinction between these employees is significant because supervisory and ran-and-file employees may form, join or assist labor organizations. Managerial employees cannot.”
When it comes to the application of the doctrine of loss of trust and confidence, the case of East Asia Utilities Corporation, et al. v. Joselito Arenas (G.R. No. 211443, December 1, 2021) is instructive:
“It must be noted, however, that in a plethora of cases, this Court has distinguished the treatment of managerial employees from that of rank-and-file personnel, insofar as the application of the doctrine of loss of trust and confidence is concerned. Thus, with respect to rank-and-file personnel, loss of trust and confidence, as ground for valid dismissal, requires proof of involvement in the alleged events in question, and that mere uncorroborated assertions and accusations by the employer will not be sufficient.
In terminating managerial employees based on loss of trust and confidence, proof beyond reasonable doubt is not required, but the mere existence of a basis for believing that such employee has breached the trust of his employer suffices. As firmly entrenched in our jurisprudence, loss of trust and confidence, as a just cause for termination of employment, is premised on the fact that an employee concerned holds a position where greater trust is placed by management and from whom greater fidelity to duty is correspondingly expected. The betrayal of this trust is the essence of the offense for which an employee is penalized.”
Did you know that there is special kind of rank-and-file employees called “fiduciary rank-and-file”?
A fiduciary rank-and-file employee refers to an employee who, in the normal and routine exercise of his or her functions, regularly handles significant amounts of money or property. (Fiamette Ramil v. Stoneleaf, Inc, et al., G.R. No. 222416, June 17, 2020)
Examples of fiduciary rank-and-file employees include cashiers, auditors and property custodians. It must be noted however, that while these employees handle significant amounts of money or property for their employer, they are not considered as managerial employees.
Related Article/s:
What are the types of managerial employees?
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