Management prerogative refers to a right that management feels is intrinsic to the ability to manage and therefore are not subject to collective bargaining. These rights are often expressly reserved to management in the management clause of the bargaining agreement or in the enabling framework. They include the right to hire, promote, suspend, or discharge employees; to direct the work of employees; and to establish policy. Rulings have established that management rights in public sector labor relations statutes are not subject to required bargaining over areas reserved to it by nature.
The employer’s right to conduct the affairs of his business, according to its own discretion and judgment, is well-recognized. An employer has a free reign and enjoys wide latitude of discretion to regulate all aspects of employment, including the prerogative to instill discipline in its employees and to impose penalties, including dismissal. This is a management prerogative, where the free will of management to conduct its own affairs to achieve its purpose. However, the exercise of its management prerogative through policies, rules and regulations on work-related activities of the employees must always be fair and reasonable and the corresponding penalties, when prescribed, commensurate to the offense involved and to the degree of the infraction.
