Managerial Employee: Meaning
Quick answer
A managerial employee is an employee whose main job is to manage the business or one of its departments, with real power over other workers, such as hiring, firing or discipline. The Labor Code defines the term in three places, each with its own definition and its own effect. What counts is the work the person actually does, not the title on the payslip.
Also called: Manager, Managerial staff
Why does it matter if you are a managerial employee?
The label changes which rules apply:
- Hours of work. Article 82 excludes managerial employees from the rules on hours of work, including overtime pay. See are managers paid overtime?
- [Service charges](/law/glossary/service-charge). Article 96 gives managerial employees no share of the service charges collected by hotels and restaurants. See service charge.
- Labor relations. Article 219 212 defines managerial employees for Book Five, the part of the Code on unions and collective bargaining.
A person can fit one definition and not another.
How does Article 82 define a managerial employee?
Article 82 opens the part of the Labor Code on hours of work. Its second paragraph says:
As used herein, "managerial employees" refer to those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof, and to other officers or members of the managerial staff.
The implementing rules (Book III, Rule I, Section 2, in the 1989 text on the Supreme Court E-Library) add the conditions. A managerial employee is excluded only if all three are true:
- The primary duty is managing the establishment or a department or subdivision of it.
- The employee customarily and regularly directs the work of two or more employees there.
- The employee has authority to hire or fire employees of lower rank, or his or her suggestions and recommendations on hiring, firing, promotion or other changes of status are given particular weight.
The same rules also exclude officers or members of a managerial staff who meet a separate list of conditions, such as regularly exercising discretion and independent judgment in work directly related to management policies.
How does Article 96 define it for service charges?
Article 96, as rewritten by Republic Act No. 11360, has its own definition, used only for that article:
For purposes of this Article, managerial employees refer to any person vested with powers or prerogatives to lay down and execute management policies or hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees or to effectively recommend such managerial actions.
So for service charges, a person who can effectively recommend hiring or discipline is also left out of the sharing.
What about supervisors and rank-and-file employees?
For labor relations, Article 219 212 describes a managerial employee as one 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. It then separates two other groups:
Supervisory employees are those who, in the interest of the employer, effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment. All employees not falling within any of the above definitions are considered rank-and-file employees for purposes of this Book.
Example
Made-up illustration: Grace has the title "store manager", but she spends the day at the cash register, directs no one and has no say in hiring or firing. She does not meet the conditions of the implementing rules, so the hours-of-work rules, including overtime, likely still apply to her. Ramon, a department head who runs a team of ten and decides promotions, meets all three conditions and is outside the overtime rule of the Labor Code, unless his contract or company policy grants it.
Workers who are outside the hours rules for a different reason, because their hours in the field cannot be checked, are field personnel. For overtime rates where the rules do apply, see the overtime pay calculator.
Which provisions use this term?
Frequently asked questions
What is a managerial employee in simple words?
A managerial employee is one whose main job is to manage the business or a department of it, and who has real power over other employees, such as hiring, firing or discipline. The job title alone does not decide it; the actual duties and powers do.
Are managerial employees paid overtime?
As a rule, no. Article 82 of the Labor Code excludes managerial employees from the rules on hours of work, which include overtime pay. A contract, company policy or collective agreement may still grant it.
What conditions must a manager meet to be excluded from the hours-of-work rules?
Under the implementing rules (1989 text), all three: the primary duty is managing the establishment or a department; the employee regularly directs the work of two or more employees; and the employee can hire or fire, or his or her recommendations on hiring, firing and promotion are given particular weight.
Do managerial employees get a share of the service charge?
No. Article 96 of the Labor Code excludes managerial employees from the distribution of service charges, and it has its own definition of the term for that purpose.
Is a supervisor a managerial employee?
It depends on the part of the Labor Code. For labor relations, Article 219 212 separates managerial employees, who can lay down and carry out management policies or hire and fire, from supervisory employees, who effectively recommend such actions using independent judgment.
General information, not legal advice. For your case, ask a lawyer, the Public Attorney's Office (PAO) or the agency.
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