The Supreme Court ruled that Ssangyong Motors’ recent layoffs were legal based on the judgment that the company’s crisis at that time was structural, not temporary, and that the company performed due diligence to avoid the layoffs.
According to the current Labor Standards Act, there must be an urgent business need for an employer to dismiss his or her employee for business reasons, and the employer has to perform due diligence to avoid such a situation.
Contrary to the second trial court, the Supreme Court saw the situation before the redundancy as a significant liquidity crisis. At that time, tax incentives for sports utility vehicles were cut, causing a decline in sales. The rapid surge in diesel prices in 2008 and the financial crises both at home and abroad added to the difficulties, too.
The Supreme Court also did not call the size of the layoff into question, mentioning that the matter depends on the employer’s determination in such a case. It also considered the Ssangyong Motors’ partial shutdown, wage freeze, and acceptance of voluntary resignation requests as efforts to evade redundancy.