Management Prerogatives


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Management Prerogatives

  2. 2. Management prerogative• Definition: An exclusive and special right, power or privilege granted to business owners.• Property right attributed to the owner of a business establishment• Par.4, Sec. 3, ART. XIII, Philippine Constitution: • “The state shall regulate the relations between workers and employers, recognizing the x x x right of enterprises to reasonable returns of investments, and to expansion & growth.”• ART. 428 of the Civil Code: • “The owner has the right to enjoy and dispose of a thing, without other limitations than those established by law.”
  3. 3. Based on what we was stated…• The owner of a business establishment has, among others, the right to control or direct its business, the right to its fruits and the right to dispose the same, subject to the regulations of the police power of the state.• Example. • When an owner of a business enterprise, after operating a profitable business for several years and decides to close the same for he is already tired of doing business and wants to travel abroad for vacation, absolutely, he CAN CLOSE the business. However, he is obliged to pay separation pay to workers as mandated by law. (Art. 283, Labor Code.)
  4. 4. Most common ManagementPrerogatives• The Right to Hire• The Right to Dismiss (Fire/Terminate)• The Right to Transfer• The Right to Promote and Demote• The Right to Discipline• The Right to Lay Down Policies• The Right to Establish Working Hours• The right to Organize and Reorganize• The Right to Reasonable return on investment;• The Right to Expansion and Growth
  5. 5. The Right to HIRE• The company has the exclusive right to purchase labor from any person whom it chooses. Thus, the transferee in good faith of a business establishment has no obligation to absorb employees of the transferor and to continue on employing them. (MDII Employees Association vs Presidential Assistant on Legal Affairs, 79 SCRA 40)• There is no law which requires the purchaser to absorb the employees of the selling corporation. As there is no such law, the most that the purchasing company may do, for purposes of public policy and social justice, is to give preference to the qualified separated employees of the selling company, who in their judgment are necessary in the continued operation of the business establishment. (San Felipe Neri School of Mandaluyong vs NLRC, et al., GR NO. 78350, 9/11/91)
  6. 6. The Right to DISMISS• The company has the right to dismiss employees in accordance with the causes and procedures established by law. This particular right must be exercised with CAUTION and without abuse of discretion because termination affects the right of the worker to Security of Tenure.• Art. 279 – in cases of Regular Employment, termination on the grounds of just and authorized causes, subject to the requirements of due process.
  7. 7. The Right to DISMISS (continued)• End of contract? Completion of contract/phase? • No prior notice is required.• Termination of probationary employment? • Notice served on employee within a reasonable time• Any decision of termination shall be without prejudice to the right of the worker to contest the same by filing a complaint with the RAB of the NLRC.• Validity of 30 day preventive suspensions.
  8. 8. The Right to Transfer• The company has the right to transfer an employee from one office to another within the business establishment provided that there is no demotion in rank, salary, benefits and other privileges.• This is a privilege inherent in the employer’s right to control and conduct its business enterprise and conduct of its business operations to achieve its purpose. It cannot be denied to the employer.
  9. 9. The Right to Transfer (continued)• IT is the employer’s prerogative, based on its assessment on the following employee attributes: • Qualifications • Aptitudes • Competence• An employee’s security of tenure does not give him such a vested right in his position as would deprive the company of its prerogative to change his assignment or transfer him where he will be most useful.• When the EE’s transfer is not unreasonable, nor inconvenient, nor prejudicial to him, and it does not involve a demotion in rank or diminution in salaries, benefits and privileges, the employee may not complain that it amounts to constructive dismissal. (PT&T vs NLRC, GR NO. 76645, July 23, 1991; Allied Bank vs CA, GR No. 144412, 11/18/03)
  10. 10. The Right to PROMOTE and DEMOTE• The company has the right to promote employees.• Promotion: scalar ascent of an employee to another position higher in rank or salary. The right to promote carries with it the right to demote.• There is no law that compels an employee to accept a promotion, as a promotion is in the nature of a gift or reward, which a person has a right to refuse. He who uses his won right, injures no one. (Milares vs Subido, 20 SCRA 954; PT&T Corp. vs NLRC, Gr No. 152057, 9/29/03)
  11. 11. The Right to DISCIPLINE• The right of the employer to subject his employees to disciplinary measures and the need for discipline have been judicially noticed.• Success in industries and public services is the foundation in which just wages may be paid. There can be no success without efficiency. There can be no efficiency without discipline. Thus, when they violate the rules of discipline, employees and laborers jeopardize the interest not only of the employer but also of their own. In violating the rules of discipline, they aim at killing the hen that lays golden eggs. Laborers who trample down the rules set for an efficient service are, in effect, parties to a conspiracy against not only to capital but also to labor.The employer has the right to instill disciplinein his employees and to impose reasonable penalties on erring employees pursuant to company rules and regulations. (SMC vs NLRC, GR No. 87277, May 12, 1989)IF the undesirable one remains in service, it will demoralize the other employees (Shoemart vs NLRC Gr No. 74229, 8/11/1989)
  12. 12. The Right to Lay Down Policies, EstablishWorking Hours, and to Organize andReorganizeIn general terms, an employer is free to regulate, accordingto his own discretion and judgment, all aspects ofemployment, including work assignments, workingmethods, time, place and the manner or work, tools to beused, processes to be followed, supervision of workers andworking regulations. (SMC Sales vs Ople, GR No. 53515,Feb. 8, 1989)
  13. 13. The Right to Reasonable Return ofInvestment and the Right to Expansionand Growth• Every business enterprise endeavours to increase its profit and in the process it may adopt or devise means designed towards expansion and growth.