Controversial court ruling fans Ssangyong concerns

Ssangyong Motor on Tuesday pledged to appeal a recent court ruling that ordered the carmaker to reinstate workers who had been dismissed in accordance with legitimate laws and regulations.

The company said the main reason for its decision was its concern that the ruling may hurt its sales, which were just starting to pick up, and dampen employees’ morale.

On Feb. 7, the Seoul High Court ordered the carmaker to reinstate 153 of the workers who were laid off in 2009 as part of restructuring plans that were devised and endorsed by both the company and the court, as the company had been under court receivership at the time.

The 153 were among 2,600 workers who voluntarily retired or took unpaid leave as Ssangyong worked to turn its business around. The high court said its ruling was based on findings showing it was unclear if the job cuts were vital to Ssangyong’s survival. The court added that the decision to dismiss them seemed to have been based on an incorrect audit report.

Prior to the February ruling, a lower court had sided with Ssangyong on the dismissal of the 153 employees.

“The higher court seems to have understated the painful restructuring efforts Ssangyong Motor undertook at the time. Furthermore, it is difficult to understand why the court chose to ignore the results from an extraordinary audit by an outside expert that found Ssangyong not guilty of window-dressing its books in order to justify the dismissals,” the Korea Employers Federation said in a statement.

Last year, dismissed employees demanded that an independent accounting expert look into Ssangyong’s financial records. The academic found no traces of manipulation. Rather, he found that the actual amount of losses was higher than that recorded.

In the meantime, all of the 455 employees on unpaid leave returned to the company in May last year when the carmaker resumed a two-shift work system, largely driven by the strong sales of the refashioned Korando SUVs.

Ssangyong denies any wrongdoing, saying the dismissals were an unavoidable part of its restructuring plans that were carried out under the guidance of the court and financial authorities.

“We don’t understand why the court has nullified a legal and legitimate decision,” said a Ssangyong executive. “We also believe it is discouraging to see that decisions and efforts made under court receivership can be so easily discarded.”

Ssangyong, which was acquired by India’s Mahindra & Mahindra in 2011, is concerned that the recent court ruling would renew unnecessary social and political disputes about the company and put a damper on its recent revival.

“Mahindra acquired Ssangyong through proper legal procedures. The recurring disputes will also have a negative impact on our recent sales recovery,” another company official said.

The maker of SUVs and luxury sedans sold 11,634 vehicles globally in January, a 9.5 percent increase on-year. On its home turf, it has sold more than 5,000 cars every month.

By Lee Ji-yoon (jylee@heraldcorp.com)