The highly controversial debate in Germany on the relationship between labour law and labour market has put labour courts in the front line of criticism. They are being blamed mainly for cultivating a fanciful and biased making of law in favour of dismissed employees rendering the outcome of dismissal decisions for employers unforeseeable and, due to the allegedly almost automatic attribution of severance payments, unnecessarily expensive. Given these legals risks, critics argue, employers would refrain from recruiting new employees and would, therefore, not sufficiently contribute to the reduction of mass unemployment. Apart from the lack of any serious empirical confirmation for that hypothesis the critical perception eclipses important functions and effects of labour courts regarding employment and fairness conditions. On the basis of recent socio-legal research on labour courts and unfair dismissals the paper shall discuss some major findings and effects. The analysis shall start with (1) the contribution of labour courts to basic requirements of fairness in a modern labour society, discuss (2) fairness issues in dismissal cases brought before labour courts, describe and analyse (3) the opening of a judicially supervised floor in the court-room for dispute resolving negotiations and for achieving an amicable settlement, ask for the effects of the intervention of third parties (4) regarding the safeguard of procedural justice, and conclude with remarks (5) on the effects of rationalising human resources management and dismissal decisions by systematizing and communicating case-law regarding the termination of employment.