Photo from Unsplash | Dylan Gillis
The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of a lawyer or you may directly contact and consult Alburo Alburo and Associates Law Offices to address your specific legal concerns, if there is any.
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:
The exercise of a management prerogative is not limitless, but hemmed in by good faith and a due consideration of the rights of the worker. In this light, the management prerogative will be upheld for as long as it is not wielded as an implement to circumvent the laws and oppress labor. (Nathaniel Dongon vs. Rapid Movers and Forwarders, G.R. No. 163431, August 28, 2013)
Exercising management prerogative in good faith is crucial as it ensures respect for employee rights, maintains trust and morale, prevents abuse of power, promotes legal compliance, and fosters a positive work environment.
However, management prerogative, the authority of employers to regulate various aspects of employment, such as work assignments and disciplinary actions, must be exercised in good faith to avoid being invalidated. While employers have considerable discretion in managing their affairs, this prerogative is not absolute and should not be wielded to circumvent laws or oppress labor. When exercised in bad faith, such actions may not be upheld by the courts, potentially leading to legal challenges and undermining the employer-employee relationship. Fair treatment and adherence to labor laws are essential to maintain the legitimacy and effectiveness of management prerogative in the workplace.
Jurisprudence says:
The right of an employer to regulate all aspects of employment, aptly called “management prerogative,” gives employers the freedom to regulate, according to their discretion and best judgment, all aspects of employment, including work assignment, working methods, processes to be followed, working regulations, transfer of employees, work supervision, lay-off of workers and the discipline, dismissal and recall of workers. In this light, 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. (St. Luke’s Medical Center, Inc. vs. Maria Theresa V. Sanchez, G.R. No. 212054, March 11, 2015)
Management has a wide latitude to conduct its own affairs, so long as it exercises its management prerogative in good faith for the advancement of its interest and not to defeat or circumvent employee rights under the law or valid agreements. Its management prerogative must likewise not be used in a way that is unreasonable, inconvenient, or prejudicial to the employees involved. (Asian Marine Transport Corporation vs. Allen Caseres, G.R. No. 212082, November 24, 2021)
It must be borne in mind that the exercise of management prerogative is not absolute. While it may be conceded that management is in the best position to know its operational needs, the exercise of management prerogative cannot be utilized to circumvent the law and public policy on labor and social justice. That prerogative accorded management could not defeat the very purpose for which our labor laws exist: to balance the conflicting interests of labor and management, not to tilt the scale in favor of one over the other, but to guaranty that labor and management stand on equal footing when bargaining in good faith with each other. By its very nature, encompassing as it could be, management prerogative must be exercised always with the principles of fair play at heart and justice in mind. (Philippine Airlines, Inc. vs. Joselito Pascua, G.R. No. 143258, August 15, 2003)
It is true that an employer is given a wide latitude of discretion in managing its own affairs. The broad discretion includes the implementation of company rules and regulations and the imposition of disciplinary measures on its employees. But the exercise of a management prerogative like this is not limitless, but hemmed in by good faith and a due consideration of the rights of the worker. In this light, the management prerogative will be upheld for as long as it is not wielded as an implement to circumvent the laws and oppress labor. (Nathaniel Dongon vs. Rapid Movers and Forwarders, G.R. No. 163431, August 28, 2013)
If management exercises its prerogative in bad faith, it can lead to a breakdown in trust, diminished morale, and legal repercussions. Employees may feel unfairly treated, leading to resentment, disengagement, and even conflict within the workplace. Moreover, actions taken in bad faith may violate labor laws or contractual agreements, exposing the organization to potential lawsuits, financial penalties, and damage to its reputation.
In summary, when the management prerogative is done in bad faith, the exercise of it will not be upheld.
Read also: Limitations on Management Prerogative
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding taxation and taxpayer’s remedies, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
All rights reserved.