9. Limitations on Management Prerogative

Factors to consider to enforce a restrictive covenant

• Whether the covenant protects a legitimate business interest of the Er;
• Whether the covenant creates an undue burden on the Ee;
• Whether the covenant is injurious to the public welfare;
• Whether the time and territorial limitations contained in the covenant are reasonable; and
• Whether the restraint is reasonable from the standpoint of public policy. (Rivera v. Solidbank Corp., G.R. No. 163269, 19 Apr. 2006)

Limitation on the Employer’s Power To Discipline

While management has the prerogative to discipline its Ees and to impose appropriate penalties on erring workers, pursuant to company rules and regulations, however, such management prerogative must be exercised in good faith for the advancement of the Er’s interest and not for the purpose of defeating or circumventing the rights of the Ees under special laws and valid agreements. (PLDT v. Teves, G.R. No. 143511, 15 Nov. 2010)

The attainment of a harmonious labor- management relationship and the existing state policy of enlightening workers concerning their rights as employees demand no less than the observance of transparency in managerial moves affecting employees’ rights. (Philippine Airlines. Inc. v. NLRC, et al., G.R. No. 85985, 13 Aug. 1993)

Principle of Co-Determination

Refers to the right of workers to participate in the policy and decision making processes directly affecting their rights and benefits, without intruding into matters pertaining to management prerogative. (PAL v. NLRC, G.R. No. 85985, 1993)

Management exercised in good faith

So long as a company’s management prerogatives are exercised in good faith for the advancement of the employer’s interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements, the Court will uphold them. (LVN Picture Workers v. LVN, G.R. No. L23495, 1970)

The Court has held 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, lay-off of workers, and discipline, dismissal and recall of workers. The exercise of management prerogative, however, is not absolute as it must be exercised in good faith and with due regard to the rights of labor. (Royal Plant Workers Union v. Coca-Cola Bottlers Philippines, inc, G.R. No. 198783, 2013)

Where the vacation leave is without pay, which the employer requires employees to take in view of the economic crisis, is neither malicious, oppressive nor vindictive, ULP is not committed. (Philippine Graphic Arts, Inc. v. NLRC, et al., G.R. No. L-80737, 1988)

In the absence of showing that the illegal dismissal was dictated by anti – union motives, the same does not constitute an unfair labor practice as would be a valid ground for strike. The remedy is an action for reinstatement with back wages and damages. (AHS/ Philippine Employees Union v. NLRC, G.R. No. 73721 , 1987)

DETERMINATION OF VALIDITY OF EMPLOYER’S ACTS

Involves an appraisal of his motives. Thus, there must be a measure of reliance on the administrative agency. In Republic Savings Bank, the CIR weighed the employer’s expressed motive in the first instance in determining the effect on the employees of management’s otherwise equivocal act. Under the current Labor Code, a labor arbiter generally hears a dispute within its jurisdiction at first instance, subject to appeal to the NLRC. (Republic Savings Bank v. CIR, G.R. No. L20303, 1967)

Contract of Perpetual Employment

It deprives management of its prerogative to decide whom to hire, fire, and promote and renders inutile the basic precepts of labor relations.

It is contrary to public policy and good customs, as it unjustly forbids the Er from terminating the services of an Ee despite the existence of a just or valid cause.

Since the relation between capital and labor are not merely contractual, impressed as they are with so much public interest that the same should yield to common good. (Philippine Telegraph and Telephone Co. v. NLRC, G.R. No. 118978, 23 May 1997)

Defiant Employers

An assumption order was issued. However, the company laid off employees, one batch after the order. Company argues that it is in the employer’s right to manage his business. Any act committed during the pendency of the dispute that tends to give rise to further contentious issues or increase the tensions between the parties should be considered an act of exacerbation. One must look at the act itself, not on speculative reactions. An employer cannot justify an act that exacerbates a pending labor dispute merely by invoking management prerogative; the act and its effect must be assessed in the circumstances of the dispute. (Metrolab Industries v Roldan-Confesor, G.R. 108855, February 28, 1996)