The contract of employment is the main instrument governing an employment relationship, with explicit deliberations on the rights and duties of parties to the contract, namely the employer and the employee. In a collective bargaining process, trade unions will scrutinise the terms and conditions of a contract of employment to seek possibilities of engaging and expanding the employer's managerial prerogative right in the bargaining process to maintain industrial harmony. Section 13 of the Industrial Relations Act 1967 has limited trade unions from encroaching on the employer's managerial prerogative rights in a collective bargaining process. Thus, employers are vested with vast discretionary power in the exercise of their day-to-day management duties. This particular section has triggered the query as to whether managerial prerogative right is absolute and unchallengeable by employees. The purpose of this article is to investigate the relevancy of managerial prerogative on the employer-employee relationship. As an initial study into the concept of managerial prerogative right, the methods used are the doctrinal analysis of statutory provisions, judicial decisions and relevant government policies.