To add a data point, Italy has some of the strongest job protection laws (at least theoretically), and still your example wouldn't be a problem at all. First of

To add a data point, Italy has some of the strongest job protection laws (at least theoretically), and still your example wouldn't be a problem at all. First of all, even for a permanent contract, there is always a 6 months "probation period", when you can freely fire your new recruit. Second, for a company under 10 employees, protection are much less strong. Third, most people nowadays are first hired with temporary contracts, which can usually be terminated with 1 month notice, without any reasons (there are exceptions for pregnant women). Those laws become a problem only when you start growing bigger. The real problems when you start are red tape, high labor taxes, and VERY high pension contributions - to pay the VERY generous pensions that generations up to baby boomers afforded themselves.