The general principles in relation to managerial prerogative were considered by Vice President Lawler in Construction, Forestry, Mining and Energy Union v HWE Mining Limited (2011) FWA 8288. “The law recognises that there is an area of managerial prerogative in which the employer as the right to make decisions on how to manage their business…
As was observed by the Full Bench in Woolworths v Brown:
“ …employers face an often bewildering array of statutory obligations in relation to matters such as health and safety, discrimination, taxation, trade practices and fair trading to mention the most obvious examples. Employers face potential liability arising from their common law duty of care to their employees and to members of the public….it is entirely reasonable, and often necessary, for employers to put in place policies, with which employees must comply, to facilitate the employer’s compliance with its obligations and duties.”
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If an employer’s exercise of managerial prerogative is not prevented by statute, an award, a statutory agreement or the contract of employment, the basis for a tribunal such as Fair Work Australia, acting as an arbitrator of a dispute, interfering with what would otherwise be a lawful exercise of managerial prerogative (such as the making or varying of a policy which employees are required to observe) was laid down in Australian Federated Union of Locomotive Enginemen v State Rail Authority of New South Wales (XPT case):
“It seems to us that the proper test to be applied and which has been applied for many years by the Commission is for the Commission to examine all the facts and not to interfere with the right of an employer to manage his own business unless he is seeking from the employees something which is unjust or unreasonable…”
I proceed on the basis that an exercise of managerial prerogative will not be unreasonable in this sense if a reasonable person in the position of the employer, could have made the decision in question.” (References omitted)
The general principles of managerial prerogative outlined in HWE Mining were recently endorsed by Deputy President Sams in Bruce Steenstra v J.J. Richards & Sons Pty Ltd (201`5) FWC 7918
“That an employer has a right to conduct and manage its business, as it sees fit, and without external interference, is not disputed. It is a well known and long held principle, stemming from such seminal cases as the XPT Case and Re Cram; Ex parte NSW Colliery Proprietors’ Association Ltd (1987) 163 CLR 117 (‘Cram’)…
The contemporary state of the law in respect to managerial prerogat