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SKorea court invalidates Ssangyong layoffs

February 7, 2014

SEOUL, South Korea (AP) — A South Korean appeal court said the layoff of 153 employees at Ssangyong Motor Co. in 2009 was unjustified, in a belated victory for auto workers who fought pitched battles with riot police at the time.

The 153 were among 2,600 workers that Ssangyong tried to shed in 2009, sparking South Korea’s worst labor strife in years. A spate of suicides among Ssangyong workers and family members followed the automaker’s restructuring.

If Supreme Court of Korea upholds the ruling, the workers will be able to return to the company now owned by Indian conglomerate Mahindra & Mahindra Ltd.

The appeal court said Friday the layoffs in 2009 could not be justified because it was not clear that the job cuts were vital to Ssangyong’s survival.

To justify the layoffs, Ssangyong exaggerated its losses by under-reporting auto sales and omitting future cash-flow from new models, the court said in a statement.

The maker of SUVs and luxury sedans was hit by the 2008 financial crisis and slumping sales, but Judge Cho Hae-hyeon said the automaker did not go to sufficient lengths to save jobs.

Kwon Young-gook, the attorney who represented former Ssangyong workers, said the unexpected ruling was a victory for justice.

“The court also admitted there could be rigging of accounts, an issue that had been raised by the labor union and other groups,” Kwon said.

Ssangyong Motor said it will appeal to the Supreme Court. The maker of the Chairman sedan and the Korando SUV denied it overstated losses. It said an audit found its accounting to be within the rules.

Failure to find a new investor contributed to the company seeking bankruptcy protection in 2009.

The layoffs attempted by Ssangyong were equal to one-third of its workforce and led to a high-profile confrontation between police and workers who occupied the company’s plant south of Seoul for more than two months, using sling shots to fire nuts and bolts.

Negotiations and lawsuits followed, reducing the number of those finally laid off to 160 and reinstating some 450 to work. Others accepted voluntary retirement packages.

The Ssangyong labor union said there were 13 suicides among Ssangyong workers and family members following the company restructuring. One worker killed himself in 2012 shortly after a lower court ruled against the workers.

Mumbai-based Mahindra acquired Ssangyong in November 2010 for 522.5 billion won ($463 million) after the court’s debt-restructuring ended. Mahindra now owns 73 percent of Ssangyong, a smaller rival of Hyundai and Kia.

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