Isn't this what the up-or-out policy at major consulting firms and investment banks is all about? I mean, it's not identical, but it's a similar idea. I assume that if sure that if firms like McKinsey are hiring/firing like this, it's not illegal.

Depends on timelines. The big places will keep you on for at least a year, possibly forever. Most small places can't afford to do more than a month on someone they don't like.

I didn't expect this to be illegal, but now that I think about it, it should be illegal-ish.

Do you know what's the general principle called, or have a reference ? Something like "hiring without intention of providing work". Wrongful hiring ?

It depends if they're full time or freelancers. If they were just freelancers on Odesk, then he's simply not using them in the future.

Remember that these aren't employees, but are temporary part-time contractors. It's not really "firing", but just ending the contract earlier for some than for others. All the contracts end ultimately, I just keep the best performers much longer than the lesser performers.

how is that breaking any law?

IANAL, and I'm just taking a stab in the dark here... But might it have to do with the work contract not being made in good faith?

That is in my basic understanding of contracts it is assumed as part of the contract that there is good will between both parties to fulfill what is set out in the contract. Practices such as these would indicate that the company has no actual intention of hiring the employee and is using the hire as an additional filter.

I suppose if the contract stipulated that there was a trial period or some such it might be a way to wiggle out of it. From a quick google search it seems you can either sue for Fraud (they advertised a permanent position and that wasn't the case, or they didn't make it explicit that the position was temporary) or Breach of Contract if they didn't specify that you were in a trial period.

Would love to hear from someone with better grasp of the situation.

IANAL or a legal scholar.

In the US, generally people are employed at will (http://en.wikipedia.org/wiki/At-will_employment) which means an employee can be dismissed by an employer for pretty much any reason and an employee can leave their job for any reason, without any notice.

There's some exceptions (for example, discrimination) but you're free to take a job in bad faith too.

A job being at-will doesn't affect whether you can offer a job in bad faith. "At will" says you have the right to fire me for any reason. "Bad faith" means you shouldn't offer me the job in the first place unless you mean it. They affect two different actions.

Let's make an extreme example: I interview Anderson, Beth, and Charlee. I like Anderson and Beth, but Beth is a better fit for the team. Charlee is terrible.

Meanwhile, All three are interviewing with my competition. So... I give jobs to Anderson and Beth. I offer Anderson a very good salary just to make sure he doesn't go to the competition. They hire Charlee, and that's a win for me. Now I fire Anderson.

I suggest that if this was my plan all along, I wronged Anderson when I offered him a job in bad faith. I may not have wronged him when I used the "at will" provision to fire him, but I wronged him when I fraudulently offered him a job that I had zero intention of letting him earn the right to keep.

In Australia we have strong job protection including unfair dismissal laws which would obviously cover this scenario.

It's part of the balance between keeping a good economy and recognising that jobs aren't just profit generation for employers, but also the means by which people support themselves and their families.

I can't provide any specific laws, but the general objection is that they were hired in bad faith. If I hire 15 people with the intention of firing 5 of them (and don't tell them that), that's a dick move. I misrepresented their opportunity at my company.

It depends what you tell them. If you said, "I'm hiring you" and you expected to fire 5, that's a horrible move. But if you told them, "We have a contract for you now, and might have more work later." Now the fact that you're intending to give 10 of them full time jobs is a very nice move!

The difference is not just semantics either. If they have other work already, the odds that they accept your first contract will depend on what you told them at the start.

This can work if there is a large enough pool of quality applicants that are either currently unemployed or are already contractors. If they are contractors, they may not be seeking full time employment (they like the mobility of contracting). But if you want to recruit someone who has a full time job, lots of luck convincing them to leave a good position (or any steady position) for a 6-month contract that "may" turn into a full time job.

This is how I was hired at my current job though. I was laid off for a few months, and a contract to hire position opened up. I took it, because it was better than not working -- but I would have never considered it if I was working at the time (they ended making me a permanent offer after 3 weeks, instead of 6 months, and I really like the place, so it ended up working out).