Yes, this happens. But the trick is that you have to have the employee on the development list before the termination is keyed in the HR system. The good news, is that the manager is usually responsible for entering the termination (voluntary or involuntary).

In happy cases like this, and in cases where you actually have significant performance problems, URA isn't so bad. The more degenerate situations happen in circumstances like:

* The employee wants to internal transfer. Bad Manager X immediately adds Employee Y to the development list and says "Oh ho ho, you're not able to transfer because of your performance problems." For Bad Manager X, the apparent incentive is high - either the employee stays and you keep the resource or they leave and you get URA credit. Obviously this leads to pretty awful situations, but I saw it happen multiple times. This can also happen when the manager is trying to protect the employee - e.g. add them to DL but not actually fire them. This usually backfires.

* Senior management pushes down URA targets. Hey, you've got a 15 person group? That means you need to pick one person to let go. Satisfied with all of their performance and understaffed to begin with? I don't care. Don't you want to have another great performer like employee Z? You need to make room, so tell me who is the least impressive person on your team. This leads to really sociopathic management behaviors.

All of this would be OK to me, if it was done transparently and more objectively. But Amazon has thrown out all the paper trail and messaged to employees that they aren't being stack ranked, which is complete bullshit.

Pro tip if you're working at Amazon: if you get a PCS with no additional grant and no base increase, you're on the development list. Find another job, or do something amazing.