LABOR CODE- MANAGEMENT PREROGATIVES

MANAGEMENT PREROGATIVES

• A RIGHT, POWER OR PRIVILEGE ACKNOWLEDGE TO BUSINESS

OWNERS

MANAGEMENT PREROGATIVES

• TO LAY DOWN AND EXECUTE MANAGEMENT POLICIES• TO HIRE• TO TRANSFER• TO DISCIPLINE• TO DISMISS• RETRENCHMENT• REDUNDDANCY• TO CEASE OPERATIONS• TO SELL THE COMPANY• TO ABOLISH POSITIONS

RIGHT TO LAY DOWN AND EXECUTE MANAGMEMENT POLICIES

• Establish Working 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)

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.

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.

• 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)

• Transfer of employees • The transfer of an employee ordinarily lies within the ambit of • management prerogatives. However, managerial prerogative to transfer personnel • must be exercised without grave abuse of discretion, putting to mind the basic • elements of justice and fair play (Castillo vs. NLRC 1999). Having the right • should not be confused with the manner by which such right is to be exercised • (Paguio vs. PLDT 2002). It cannot be used a subterfuge by the employer to rid • himself of an undesirable worker (Castillo vs. NLRC 1999).

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)

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.

• 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.

RIGHT TO RETRENCHMENT

• Exists during the period of business recession, industrial depression, or seasonal fluctuations

• Retrenchment is a management prerogative, a means to protect and preserve the employer's viability and ensure his survival. 1 It is one of the economic grounds to dismiss an employee resorted to by an employer primarily to avoid or minimize business losses. 2 In this regard, the employer bears the burden to prove his allegation of economic or business reverses, 3 otherwise, it necessarily means that the dismissal of an employee was not justified. 4

• We apply this precept in the present case where herein private respondents, 5 employees of petitioner Polymart Paper Industries, Inc. (Polymart), were dismissed on July 4, 1992 on the ground of retrenchment.

• Retrenchment is something akin to downsizing. When a company or government goes through retrenchment, it reduces outgoing money or expenditures or redirects focus in an attempt to become more financially solvent. Many companies that are being pressured by stockholders or have had flagging profit reports may resort to retrenchment to shore up their operations and make them more profitable. Although retrenchment is most often used in countries throughout the world to refer to layoffs, it can also label the more general tactic of cutting back and downsizing.

RIGHT TO REDUNDANCY

• Exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise

• Redundancy is one of the authorized causes for termination of • employment. Under Article 283 of the Labor Code, employees should be given • separation pay of one (1) month pay per year of service in case of termination on • the ground of redundancy. • • The Court affirmed the termination of employment due to redundancy in • several instances. In the case of De Ocampo vs. NLRC (cf. Serrano vs. NLRC • 2000) the Court upheld the termination of employment of three (3) mechanics in a • transportation company and their replacement by a company rendering • maintenance and repair services, as follows:

RIGHT TO CEASE OPERATIONS

• In any case, Article 283 of the Labor Code is clear that an employer may close or cease his business operations or undertaking even if he is not suffering from serious business losses or financial reverses, as long as he pays his employees their termination pay in the amount corresponding to their length of service. It would indeed be stretching the intent and spirit of the law if we were to unjustly interfere in management’s prerogative to close or cease its business operations just because said business operations or undertaking is not suffering from any loss.

• “ARTICLE 283. Closure of establishment and reduction of personnel. – The employer may also terminate the employment of any employee due to the installation of labor saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers at least one (1) month before the intended date thereof…” The purpose of the notice requirement is to enable the proper authorities to determine, after hearing, whether such closure is in good faith, i.e., for bona fide business reasons (Complex Electronics Employees Association vs. NLRC 1999).

RIGHT TO SELL THE COMPANY

RIGHT TO ABOLISH POSITIONS

• Installation of labor saving devices • The law authorizes an employer to terminate employment due to the • installation of labor saving devices. The courts will not interfere with the

exercise • of this management prerogative in the absence of abuse of discretion,

arbitrariness • or maliciousness. However, the employer is also required to furnish a written • notice of the intended termination to the employee and to the Department of • Labor and Employment at least one (1) month before the intended date of • termination. This is to enable the affected employee to contest the reality or

good • faith character of the asserted ground for the termination of his services before

the DOLE