It's Germany, they have some bizarre employment laws.

@Tom And, what? If you're firing someone, it means you don't want them around anymore. Yes, it's bizarre to be required to pay them weeks/months of salary after you've made it clear they are so bad at their job you're actually terminating employment. Escorting someone off the premise isn't hostile, it protects the organization - which is why it's sometimes done in the US. People become emotional, angry and irrational after learning they no longer have a job... and sometimes can be destructive or subversive. If they knew they had 3 months of pay regardless, perhaps they're less willing though.

But as previously said, that puts an awful lot of burden on the employer, unfair burden in my opinion. It makes hiring someone new a very potentially expensive proposition if you have to get rid of them for whatever reason, and likely weighs into hiring decisions of employers in that country. Like I said, there's a happy middle-ground, but I would not characterize the US "way" as hostile, it's just standard procedure and not personal, and isn't very common in reality.

You can still get him escorted out by security, however you still have to pay them their notice period, you just forfeit getting any work in exchange for that. It is common practice in finance IT to do so, risk mitigation is worth more than 3 months of pay.

Also its a great thing because as you mentioned it heavily influences the hiring decision, employment becomes more than just "yea, whatever, just come work here, I can get rid of you again whenever I want anyway", you are actually trying to find someone to enter a long term relationship with.

@YanickSalzmann I imagine is results in fewer hires, unfortunately. Most of the US is at-will employment, meaning you can leave whenever for whatever reason, and you can be fired whenever for whatever reason (short of some contract the organization is holding themselves accountable to). Different philosophies on who's responsibility it is to care for employees expenses (food, house, etc) I suppose... in the US, it's your responsibility, not a burden of the company.

Does the termination policy change the amount of work that needs to be done? If not, how does it affect the number of hires?

@YanickSalzmann It changes how many people the organization is willing to hire, since apparently any hire means being committed to long term employment or expensive unproductive "buy-outs". This means seasonal hiring will be reduced, on-demand hiring will be reduced, and a company on the verge of needing an extra hand will have to think very carefully before actually conducting interviews. It has the impact of making organizations be far more careful about needing to hire someone, which is a net-reduction in available jobs. The GDP per Capita seems to highlight this productivity loss.

@SnakeDoc You are right in certain fields of work. I have only worked in IT and something like on demand and short term practically does not exist in my country. You typically get external contractors to bring some new hires up to speed with the niche know-how, but almost everywhere this is just a short term solution. I see a disadvantage for positions that do not require much training, however once again, you have a certain amount of work that needs to be done and people are only willing to commit to so much extra time.

Hire & Fire allows you to search for the most desperate person that accepts your inhumane working conditions without any restrictions. With some notice periods you at least bleed long enough after hiring someone who does not want to be "enslaved" that its not worth trying to get the most desperate person.

And @JörgWMittag mentioned there are still probation periods, staggering of notice periods and so on that allow you to get rid of complete misfits.

@YanickSalzmann Yes, not IT - IT tends to be the ones most often escorted out the door since they have the most power to damage the organization in spite. Unfortunately OP is now in a situation where this fired employee has zero motivation to be productive, and gets 3 months salary regardless. That part, alone, is what is boggling my mind, not the "escort them away" part (although that's just good practice to do for numerous reasons, none of which include "We Germans just don't do bad things to former employers")

@YanickSalzmann Hire & Fire isn't really that common in the US, in my experience. What is more common is small businesses not having thorough onboarding processes and iron-clad probationary periods... and end up with a very unproductive (or harmful!) employee as a result. Big mega-corps can tolerate 3 months salary, a small business, not so much. I don't know the small business scene in Germany, admittedly, but this is a very anti-small business law which greatly favors the "mega-corps".

They are productive enough to fulfill their contract, but apparently not as productive as their employer wishes. @Tom mentioned several options how the employer can make the most of the notice period. I think German (and Swiss in my case) law is acknowledging that there is a huge imbalance of power between employer and employee (i.e the emloyer has a muuuch longer metaphorical stick than the employee) and tries to bring some balance into it. There are obviously extremely rare cases like the one OP mentioned, but overall it restores balance.

When Hire & Fire is used, it's often seasonal employment (where everyone knows it's short term, but often contracts aren't used in my experience either). This would involve warehouse work, retail stores, restaurants, etc. Plenty of teenagers and college kids willing to work under these conditions... getting stuck paying them months of salary would be ruinous to the organization, however.

That is - in my subjective opinion - an excuse. We have tons of temporary workers and they get special temporary contracts with pro rata vacation, retirement money and whatnot. On this page there are hundreds if not thousands of examples of completely inacceptable working conditions with the response "Well, just suck it up or search for a new job, you are hire & fire"