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A. The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare ( Section 9, Article II, 1987 Constitution) The primordial reason for the passage of labor laws is social justice. The Constitution mandates that the State is duty-bound to provide and guarantee the following 1) labor; 2) employment 3) relations between workers and employers; 4) Protection of the rights of workers to: a. Self-organization; b. Collective Bargaining c. Security of Tenure d. Just and Humane Conditions of Work ( Section 3, of the Labor Code and Section 3, Article XIII of the 1987 Constitution) B. The State shall regulate the relations between workers and employers recognizing the right of labor to its share in the fruits of production and the right of enterprises to reasonable returns of investments, and to expansion and growth (Section 3, Article XIII of the 1987 Constitution) II. A. MANAGEMENT PREROGATIVE PREROGATIVE TO REGULATE AND CONTROL ALL ASPECTS OF EMPLOYMENT While Article 279 of the Labor Code guarantees security of tenure to the employees, it s well-recognized principle that employers have the right and prerogative to regulate every aspect of their business, generally without restraint in accordance with their own discretion and judgment (Deles, J.R vs. NLRC, G.R No. 121348, March 9, 2000) Regulation of the Promotion of full Full protection to

Song long as the exercise is not attended with abuse of discretion, the right of employers to enforce their prerogatives should be respected. (Pantranco North Express, Inc. vs. NLRC, G.R. No. 106516, September 21, 1999) MANAGEMENT is any person or entity doing business for profit, with the use of labor and capital. MANAGEMENT PREROGATIVES are the rights and privileges of decision and action flowing from managerial control embraces all aspects of the business. Two Aspects of Management Prerogative:

1. Operational Aspect which means the freedom of the employer to direct the operations of its business as it sees fit a. Impose reasonable conditions for hiring b. Determine the size of the workforce. c. Reasonable returns of investment and to expansion and growth. d. Contract out the performance of some of its jobs or services. e. Reduce his personnel or close his establishment in the following cases: i. Introduction of labor-saving devices results in redundancy; ii. Retrenchment is necessary to prevent losses or cessation of operation of the establishment; and iii. Total closure is justified due to substantial losses in business operations. f. Suspend business operations in case of natural calamities that hit the area of operations. 2) Personnel Aspect which means the freedom to prescribe policies and rules regarding personnel actions, discipline and organization, including the right to HIRE and FIRE. Nature of Management Prerogative: Except as limited by special laws, an employer is free to regulate, according to his own discretion and judgment, all aspects of employment. B. EXTENT OF MANAGEMENT PREROGATIVE: Management determines the direction and conduct of its business and regulates all aspects of employment, including: 1) Hiring 2) Work assignments 3) Working methods 4) Time, place, manner of work 5) Tools and processes 6) Supervision of workers 7) Work regulations 8) Transfer of employees 9) Discipline, dismissal, lay- off, recall of employees Exercise of management prerogative must be: 1) in good faith, not based on malice 2) for valid business reasons 3) not covered by any legal or contractual limitation C. LIMITATIONS ON THE EXERCISE OF MANAGEMENT PREROGATIVE 1) Contractual limitation a. Individual contracts May specify agreed terms and conditions of employment and because of their contractual nature, cannot be altered unilaterally by Management b. Collective Bargaining Agreements (CBA) May specify agreed terms and conditions of employment and because of their contractual nature, cannot be altered unilaterally by Management

c. Implied terms and established practices (Company Practice) Implied terms and conditions arise from company practices and usually become a vested right on the part of the employee. Although not a contract, it still cannot be altered unilaterally. 2) Legal limitation a. Presumption in favor of labor b. Security of tenure c. Labor standards d. Right to self - organization e. Collective bargaining (if unionized) D. PREROGATIVE TO PROMULGATE POLICIES Management prerogative to promulgate policies is likewise qualified by existing CBA, existing law, rules and regulation Validity of Policies promulgates largely depends on its compliance with the law and reasonableness to qualify as valid exercise of management prerogative In the case of Duncan Association of Detailman-PTGWO and Pedro Tecson v.Glaxo Wellcome Philippines, Inc.,( G.R. No. 162994, September 17, 2004., the court passed on the validity of the policy of a pharmaceutical company prohibiting its employees from marrying employees of any competitor company. It held that Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other confidential programs and information from competitors. It considered the prohibition against personal or marital relationships with employees of competitor companies upon Glaxosemployees reasonable under the circumstances because relationships of that nature might compromise the interests of Glaxo. In laying down the assailed company policy, we recognized that Glaxo only aims to protect its interests against the possibility that a competitor company will gain access to its secrets and procedures. The requirement that a company policy must be reasonable under the circumstances to qualify as a valid exercise of management prerogative was also at issue in the 1997 case of Philippine Telegraph and Telephone Company v. NLRC , G.R. No. 118978, May 23, 1997. In said case, the employee was dismissed in violation of petitioners policy of disqualifying from work any woman worker who contracts marriage. The court held that the company policy violates the right against discrimination afforded all women workers under Article 136 of the Labor Code, The cases of Duncan and PT&T instruct us that the requirement of reasonableness must be clearly established to uphold the questioned employment policy. The employer has the burden to prove the existence of a reasonable business necessity. The burden was successfully discharged in Duncan but not in PT&T. III. POLICY MAKING A. Compulsory Policies


DOLE Department Advisory No. 5 Series of 2010 (It shall be mandatory for all private workplace to have policy on Hepatitis B and its implementation) DOLE Department Order No. 53-2003 (It shall be mandatory for all private establishments employing ten (10) or more workers to formulate and implement drug abuse prevention and control programs in the workplace, including the formulation and adoption of company policies against dangerous drug use.) DOLE department Order No. 102-2010 (HIV/AIDS PROGRAM)



B. Company Initiated Policies 1) Dress Code Policy 2) Open Door Policy 3) Policy on Employees Benefits 4) Moonlighting Policy 5) Policy on Use of Social Media 6) Policy on Use of Company Property 7) Policy on Employee Discipline 8) Policy on Sexual Harassment 9) Policy on Training and Career Development 10)Policy on Retirement 11)Policy on Termination 12)Policy on Confidentiality and Information Security 13)Policy on Complaint and Grievances IV. V. VI.