Earlier quoted context omitted.
"filter out (gently fire) the ones that aren't as good." If the employee finds out you "hire more than you need of the top performers", you end up with a potential court case. If I found this out about a former employer, I would have pursued them to the end of hell.
how is that breaking any law?
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.