Validity of socially justified dismissal and allocation of litigation costs in employment termination proceedings

The Federal Labor Court (BAG) reversed the Hessian Labor Court of Appeal’s decision and dismissed the employee's appeal, thereby reinstating the Frankfurt Labor Court’s judgment and placing all litigation costs on the employee. The dispute concerned the termination of an employment contract, specifically challenging the validity of the dismissal and the associated severance or reinstatement claims. The BAG determined that the lower court erred in its assessment of the legal requirements for a socially justified dismissal, ruling that the employer’s termination was valid under the applicable provisions of the Protection against Dismissal Act (KSchG) and general labor law principles, which precluded the employee’s substantive claims for continued employment or compensation.