Because firing people in Germany is a multi-year process that requires (among many other things) paying for a complete training course in all job-relevant skills under the assumption that any incompetence is caused by insufficient training.
As has been stated above, I’m guessing in this specific example it would’ve been due to the rather strict labor laws, which I’m not going to comment my opinion on, just to clarify/explain: Here (Germany), you can basically not fire someone if your company has >10 full-time employees, and they’re not actively misbehaving (or under trainee/probationary status). Yep, this statement means exactly what it reads.
So I’m guessing that’s the reason for this “passive firing” method.
I mean I'd guess it was because it's somewhere with a higher bar to firing. Redundancy or dismissal are both much more complicated (expensive) than simply making it very clear you'd like someone to leave.