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Ruling sanctioning former Zsolnay staff upheld

The Court of Zalaegerszeg (western Hungary) on Tuesday upheld a ruling sanctioning former staff of porcelain maker Zsolnay for resigning en masse in June 2016. The 117 former staff left Zsolnay to become employees of Ledina Kerámia, which the local council of Pécs (SW Hungary) - then minority owner of Zsolnay - established to take over the business if the company went bankrupt.

Around the same time, state news wire MTI recalled, Zsolnayʼs Syrian-born majority owner Bachar Najari complained at what he said was an “intended hostile takeover” supported by “representatives of the minority owner,” saying that his company was “under attack” by parties who wanted to take over its business on the market for European Union-supported building renovation.  Zsolnay tiles and ornaments adorn many landmark Art Nouveau buildings in Hungary, MTI noted.

Earlier in 2016, Hungaryʼs National Tax and Customs Administration (NAV) launched an investigation of the company on suspicion of tax fraud and seized Zsolnayʼs inventories. A prosecutor later invalidated the seizure because NAVʼs raid at the company was illicit.  

The Hungarian government at the time nevertheless backed efforts by the council of Pécs to wrest control of the firm, saying the government would like to create business opportunities for Zsolnay through the stateʼs renovation of a number of landmark buildings in the capital, such as the Museum of Applied Arts.

A liquidation procedure was also launched against Zsolnay by  Hungarian-owned construction company West Hungária Bau, which had purchased a debt that Zsolnay owed to the state-owned Hungarian Development Bank (MFB), but the procedure was terminated by a Zalaegerszeg court not long after its initiation after the majority owner repaid debts. At the time, a Zsolnay statement said the courtʼs decision “puts an end to the organized theft of the factory with the involvement of politicians and businessmen.”

The 117 former staff, most of the 170 people formerly on Zsolnayʼs payroll, argued that they left the company because of a breach of trust stemming from the suspicion of unlawful behavior. However, the court ruled that the NAV probe had no impact on their employment with Zsolnay or their remuneration and was thus insufficient to constitute a breach of trust. 

The former staff members must each pay more than HUF 25,000 in court costs as well as a fee for a month of absence from work. Together, the sanctions amount to more than HUF 20 million.