On the other hand, businesses are saying they are more likely to give someone a go, knowing that if the newbie doesn't work out, they can let him go without it costing the company a fortune.
Both arguments have merit, so it would seem a simple solution is in order. How about placing a cap, or a stepped penalty payment on the number of 90 day job terminations, relative to the size of the organisation and perhaps the industry?
So if a company is hiring then firing a high proportion of it's new hires, then perhaps they pay increasing amounts of redundancy. The redundancy fees might even be shared by all people fired to that point, over a moving 12 month period.
Any business churning through an excessive amount of new hires is either gaming the system or needs to improve their candidate screening process. Either way, the additional fees can send a signal for them to sort their act out, and ultimately, prohibit a serial hire/fire business from abusing the 90 day rule.