The law recognizes the employer’s highly discretionary right to manage all aspects of employment. Management prerogative is that wide freedom of the management “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, lay off of workers and discipline, dismissal and recall of workers.”[1]

This right is tempered only by these limitations: that it must be exercised in good faith and with due regard to the rights of the employees.[2] So long as the latter two are observed, the employer has the right to regulate every aspect of employment.

Management prerogative is generally exercised by managers. Managerial employees are those “vested with the powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees.”[3]

To be considered managers by law, the managerial employees have to meet all of the following conditions:[4]

  • Their primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof;
  • They customarily and regularly direct the work of two or more employees therein; and
  • They have the authority to hire or fire other employees of lower rank; or their suggestions and recommendations as to hiring and firing and as to the promotion or any other change of status of other employees are given particular weight

Management prerogative may be exercised by the employer and his representatives, including managerial employees.

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[1] Julie’s Bakeshop and/or Edgar Reyes v. Henry Arnaiz, et al., G.R. No. 173882, 15 February 2012.

[2] Ibid.

[3] LABOR CODE. Article 219 (m).