Court declares 2009 Ssangyong Motor layoffs `invalid`

A Seoul appeals court annulled Friday the dismissal of 153 former employees of Ssangyong Motor who were part of the company`s mass layoff plan in June 2009.

The Seoul High Court declared invalid Ssangyong`s dismissal of the 153 former employees and ordered the carmaker to pay one million won (930,000 U.S. dollars) to each of them as part of their lost salaries. If the ruling is upheld by the top court, the workers can return to their former jobs at Ssangyong.

The court did not acknowledge any of the company`s justifications for the layoffs including a "crisis" in its financial soundness and the appropriateness of the layoff size. Under Korea`s labor law, employers must meet all legal requirements for layoffs, such as urgent managerial need, the management`s efforts to avoid layoffs and fair layoff standards.

"Although it is acknowledged that Ssangyong Motor was in a liquidity crisis in 2008, it cannot be seen that the crisis in its financial soundness persisted," the court said, adding that the carmaker failed to meet the managerial requirement for layoffs. "Although the company received applications for voluntary retirements, it is hard to view that the company made all efforts possible to avoid layoffs."

Regarding the company`s reference to a "crisis in financial soundness" as a ground for the layoffs, the court said that Ssangyong had intentionally omit expected sales revenues for new car models and reduced sales of older models on its accounting book. There have been suspicions in the political and labor circles that Ssangyong justified its massive layoffs in 2009 by doctoring its accounting books to inflate losses.

Kim Tae-wook, an attorney representing the laid-off workers, claimed that the Financial Supervisory Service, Deloitte Anjin LLC in charge of Ssangyong`s accounting, and the carmaker should be held responsible since the court acknowledged the accounting manipulation. "We cannot be entirely happy about the ruling when I think about 24 colleagues (colleagues or their families who committed suicide or died after the layoffs) but I think that the ruling can at least ease their resentment," said Kim Deuk-jung, the leader of Ssangyong`s labor union.

Meanwhile, an official at the Korean Employers` Federation expressed concern over the ruling, saying, "The latest ruling could intensify social frictions over layoffs and negatively affect businesses` flexibility in manpower management."