MANAGEMENT PREROGATIVE: Rights of the employer to make profit

MANAGEMENT PREROGATIVE: Rights of the employer to make profit

Labor disputes cannot always be in favor of labor. The employers also have rights as much as the employees. The employer is allowed to control the variables in business operations, to enhance the chances of making a profit.  The Supreme Court have held in various cases that management is free to regulate, according to its own discretion and judgment, all aspects of employment, including hiring, work assignments, working methods, time, place and manner of work, processes to be followed, supervision of workers, working regulations, transfer of employees, work supervision, layoff of workers and discipline, dismissal and recall of workers. The Court, in another case, further states that while tilting the scales of justice in favor of workers, the fundamental law also guarantees the right of the employer to reasonable returns for his investment. xxx we must acknowledge the prerogative of the employer to adopt such measures as will promote greater efficiency, reduce overhead costs and enhance prospects of economic gains, albeit always within the framework of existing laws.

Some points to consider:

1.       When is management prerogative justified?

Management prerogative is justified, provided that the following are exercised:

a.       In good faith

b.      For the advancement of the employer’s interest

c.       Not to circumvent the rights of the employees

2.       Is it the prerogative of management to transfer an employee?

Yes. The management can transfer employee where it is perceived by the employer that the employee’s qualifications, aptitudes, and competence can function with maximum benefit to the company. This is a privilege inherent in the employer’s right to control and manage his enterprise effectively. An employee who refuses to be transferred when such transfer is valid, is guilty of insubordination.

3.       Is non-competition clause in employment contract valid?

Yes. The employer has a right to protect trade secrets and other proprietary data since a former employee, in whom the employer had invested time, training, and other resources, could potentially cause significant business loses to the employer if he is allowed to work with a competitor or set up his own business upon resignation or termination from the employer’s business.

4.       Is contracting out of services (hiring contractual) valid?

Yes. Management may contact out services in the exercise of its management prerogatives. The reduction of employees in a company made necessary by the introduction of the services of an independent contractor is justified when the latter is undertaken in order to effectuate more economic and efficient methods of production. The complaining employee must prove that the management acted maliciously.

5.       After completing probationary period, is an employee automatically becomes a regular employee?

No. Upon expiration of their contract of employment, academic personnel on probation cannot automatically claim security of tenure and compel their employers to renew their employment contracts. Probationary employees enjoy security of tenure, but only within the period of probation. Likewise, an employee on probation can only be dismissed for just causes or when he fails to qualify as a regular employee in accordance with the reasonable standards made known by the employer at the time of his hiring.

6.       Is term employment for more than 6 months valid?

Yes. Employment for a specific period, even more than 6 months, is valid provided that it was knowingly and voluntarily agreed upon by the parties, without any force, duress, or improper pressure.

7.       Can an employee with negative attitude be terminated?

Yes. An employee whose actions erode the morale of his co-employees may be terminated. If after several warnings, the employee obstinately refuses to curtail a bellicose inclination, he may be terminated. It will be considered as serious misconduct.

8.       Can theft of small value be a ground for termination?

Yes. The value of the property stolen is not material in termination due to serious misconduct. Even if the stolen materials are considered scrap, it still had monetary value which he cannot appropriate to himself.

9.       Can a manager contravene the directive of a VP?

No. As a general rule, although a managerial employee is clothed with discretion to determine what was in the best of the company, said managerial discretion is not without limits. Its parameters were contained the moment the discretion was exercised, and then opposed by the immediate superior for being against the policies and welfare of the company. Hence, any action in pursuit of the discretion thus opposed had ceased to be discretionary and could be considered as willful disobedience.

10.   Is there a need for actual hearing or conference in terminating an employee?

No. It is not necessary that an actual hearing or conference be held. The Labor Code only provides that an employer must provide the employee ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires.