For permanent employees, there's severance payment when firing someone. The amount depends on how long the employee has been in the company, as well as when the contract was signed (the legislation has changed and doesn't apply retroactively). This means paying the dismissed employee something between 12 to 30 days wages per each full year of service. Bear in mind that the value is capped via multiple factors, e.g. it can't be bigger than X times the minimum wage, it can't be bigger than Y times the monthly wage.
However, most contracts are fixed-term: for those, the company simply has to inform the employee that they don't intend to renew. There are also many, many people illegally hired as independent contractors, but working full-time on company premises; those are "fire at will".
There are alternatives [1], however:
* A collective dismissal procedure;
* Dismissal due to the termination of a job position;
* Dismissal due to the employee's incapability to adapt.
[1] http://us.practicallaw.com/6-503-4030?source=relatedcontent#...
For the first six months of a permanent contract you can for anyone at any time for no reason.
If the laws were written so that I could not fire that person, then I would be forced to hire the person that interviewed the best. The woman I mentioned above would have interviewed terribly, she is very shy. It turns out that this is her first job too, so she has almost zero interview experience.
I would do what any other rational person would do - look at all the candidates and pick the one I thought would be best. As for her nerdy hobbies, I included the description to paint a mental picture. I am fairly nerdy myself, cosplay would be a plus to me.
With Fire-at-Will I can take a chance on anyone. This is especially useful with lower lever, entry positions where they learn on the job. I have tried hiring all types; the results have been surprising. The sure thing employees aren't always, and the WTF employees sometimes surprise you.
The woman in charge of my accounting, was an 18 year old goth cosplayer, moved from the warehouse to the office as helper during a layoff. She is now 22 (still goth/cosplayer) and does her job like she has 20 years experience. I would never ever have hired her for that job if I could not fire her easily. But she is great.
This is the positive side of Fire-at-will. In practice, you never fire anyone on a whim because it destabilizes the rest of the employees. I only fire the people who need it, and by then most of the staff probably wants them gone anyway.