That's great in countries with poor employee protection, but in most European counties getting rid of someone is easier said than done.
You tend to need a very good reason, backed up with evidence and, unless it's a major major thing, you need to have worked with the employee to correct the behaviour.
In a country like that a policy which states "Take some vacation" couldn't be used to discipline someone because the issue is actually that they're conforming with it a little too much?
It doesn't mean good vacation policies aren't possible though. For instance you can have flexible allowances. You get, say, 25 days as a basic allowance, you have to take at least 20, you can take up to 30 but you get charged for / paid extra for the variation from your allowance of 25 days.
That gives people the flexibility to have either more money or a very generous allowance, while still being manageable.