Management prerogative is not unbridled

Published 3 October 2022, The Daily Tribune

Is a “No-spouse employment policy or Exogamy Policy” an unlawful or a lawful exercise of management prerogative?

This was discussed and clarified by the Supreme Court in the recent case of Dela Cruz-Cagampan vs. One Network Bank, G.R. 217414. 22 June 2022.

This case involves an illegal dismissal complaint filed by the petitioner against the respondent when the latter terminated the petitioner’s employment after she was married to a co-employee. The respondent based the termination on what it called an “Exogamy Policy,” stating that “xxx when two employees working for the Company are subsequently married through Church or Civil Court rites, one must terminate employment immediately after marriage. xxx”

The NLRC, however, found no iota of proof that supports the respondent’s assertion that the petitioner’s marriage to her fellow employee places the bank’s funds at risk for embezzlement. It stated that the respondents’ fear is more imagined than real.

Meanwhile, the Court of Appeals excused the policy as a management prerogative. The CA found that the respondent bank had reasonable business necessity in implementing the policy, and it is a bona fide occupational qualification exception.

The SC agrees that “employers may freely conduct their affairs and employ discretion and judgment in managing all aspects of employment.” However, their exercise of this right to management prerogative must be in accord with justice and fair play.

The SC further noted that no less than the Constitution mandates the State to “afford full protection to labor… and promote full employment and equality of employment opportunities for all.”

In this case, it was clear that the NLRC found that the respondent did not state its justifications for its policy and clearly connected the same with its legitimate business purpose.

The SC noted its discussion in Star Paper Corp. v. Simbol G.R. 164774, 12 April 2006, the principle of bona fide occupational qualification which may possibly justify an employer’s policy prohibiting spouses from working in the same company or an “exogamy policy”.

Accordingly, there are two key elements for the exception, “(1) that the employment qualification is reasonably related to the essential operation of the job involved; and (2) that there is a factual basis for believing that all or substantially all persons meeting the qualification would be unable to properly perform the duties of the job.”

The SC agreed with the findings of the NLRC that the respondents’ fear is more imagined than real since no proof relates the policy with the risk of employment of the petitioner and her husband. The SC said that the bank can implement stronger confidentiality measures that do not impinge on employees’ right to security of tenure.

Further, the subject policy was couched in a general manner, that whenever any two of their employees marry, one must terminate employment immediately after marriage. The general articulation allows respondents to whimsically enforce its policy, and thus it leaves them the option on which employee’s services to terminate.

In sum, the SC reminded that “an employer’s blanket policy of no-spouse employment is discriminatory. To justify its enforcement, the employer must clearly establish a reasonable business necessity.”

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