What does management prerogative mean? What are you entitled to do as an employer? Are you allowed to set rules? Are you allowed to discipline? If yes, up to what extent is legal?

Imagine you're playing a board game with friends. When you're playing the first time, there is a tendency to be timid and to play it safe if you don't know the rules of the game. You don't take chances, and you avoid using all the power-ups available to you. You're afraid of making a mistake.

Board game in early evening sunlight.
Photographer: Christopher Paul High | Source: Unsplash

It's a lot like the game of business. That's why we're doing this article: to get you up to speed with the rules. The intention is to explore what the law allows employers and managers to do with respect to their employees.

The best 2 letter word in the law

If you attend one of my seminars, there is a phrase that I will be drilling into your head over and over. It's called management prerogative (or "MP" for my students).

But "prerogative" seems like a complicated term. And I think that's part of the problem. When people think something is too complicated or beyond reach, then they would rather avoid it than see how it can help them. Let's address that problem now by simplifying the concept.

Prerogative means a RIGHT. A power. An ability.

Simply put, management prerogative refers to "rights" granted to the management by the law to do something at work. Going back to the game analogy, here are the abilities and powers you can use in the game to achieve your objectives faster and win the game for your team.

Now that you know what the term management prerogative means, you may be asking…

“What does management prerogative cover, Attorney?”

Glad you asked. Let's start off with how the law, thru Supreme Court cases (and not the labor code), have defined management prerogative:

Except as limited by special law, an employer is free to regulate, according to his own judgment and discretion, all aspects of employment.

To see this doctrine in action, I invite you to google "management prerogative" and see what cases come up on the search. In addition, you may want to check out these cases which affirmed that doctrine:

  • Imasen vs. Alcon G.R. No. 194884 October 22, 2014, 
  • San Miguel Brewery Sales Force Union (PTGWO) v. Hon. Ople, 252 Phil. 27, 30 (1989);
  • Autobus Workers’ Union v. NLRC, 353 Phil. 419, 429 (1998)

Did you get how awesome that is?

The magic word in the doctrine is the term "all aspects" of employment. Do you realize how powerful that is? Simply put, it says that managers can make changes and choices about pretty much anything provided that it is within the realm of work.

Employers are given leeway by the law to create rules and implement them as long as they relate to work.

Let's see how this applies in the real world. As an employer, you are empowered by the law to create policies and regulate the following subjects in the workplace:

  1. Hiring -you get to choose who can join your team by imposing requirements and qualifications.
  2. Work assignments – you can determine what your team works on.
  3. Working methods and Work supervision – you can direct how your team will be doing their jobs. What tools and procedures they will be using.
  4. Time of work – work schedules and shifts are within your power to determine. Have them work when the business needs them, not only when it is convenient for them.
  5. Place of work and Transfer of employees – you determine where to deploy your people.
  6. Manner of work and Processes to be followed – set parameters on what procedures and techniques your employees will be using to complete their missions.
  7. Discipline and Dismissal – Direct the boundaries of what is acceptable and unacceptable behavior in the workplace. Make violators accountable for their actions.
  8. Recall of workers.

…and the list goes on and on.

Mind you, this was not meant to be an exclusive list. This was just an example of proper subject matters. Feel Free to add your own to the list, as long as they are relevant. 

Again, the law says that you have the power to govern "all aspects of employment" so you can enforce them as long as you come with good faith and you don’t trample upon your employee’s rights.

"Attorney, are you sure managers were given this latitude of power?"

Yes, believe it. The Supreme Court itself has recognized that if the management prerogative is exercised legitimately, even the courts should stay away from interfering. That is how precious this right is.

Jurisprudence recognizes the exercise of management prerogatives. Labor laws also discourage interference with an employer’s judgment in the conduct of its business. For this reason, the Court often declines to interfere in legitimate business decisions of employers. The law must protect not only the welfare of employees, but also the right of employers. (Endico v. Quantum Foods Distribution Center, G.R. No. 161615, 30 January 2009)

Basically, the law is saying, "Guys guys… let's allow employers to govern their territories the way they choose. Let's approach this with the assumption that they're trying their best and keeping the welfare of everyone as the highest priority. Unless there is a blatant violation of employee's rights, that's the only time we should step in."

Are there restrictions?

I'm glad you asked. While the law provides wide latitude in governing their teams, it can be prone to abuse. That's why I've identified 3 restrictions actually and wrote about these in subsequent articles. You can read about them here:

  1. Policy Drafting: Rule # 1 – Be Reasonable
  2. Policy Drafting: Rule # 2 – Be Relevant
  3. Policy Drafting: Rule # 3 – Be Realistic

Now What?

So just to summarize, here's what we learned today:

  • Yes, the law allows employers to govern their teams.
  • You govern thru the creation of policies and implementing them to regulate them.
  • These policies and regulation cover "all aspects" of work.
  • Despite this wide power, you can't abuse this power.

Now that you understand the power you have been given, what areas of work can you make positive changes? What do you want to regulate? Let me know in the comments.

Note: This post was originally published on April 25, 2017, and has been updated to include new questions from readers and students.

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