No, that is not the case. You can still fire people and you can do so especially if they are underperforming. You just can't do it as a mass layoff.
If you fire someone then you need a reason to do so. If you fire people because of a layoff then you need to show that the layoff is legitimate.
You can not just group underperformers and let them go as a layoff because you are circumventing labor law. You can not lie about the reason why you are letting someone go.
No one would care if you fired 99% of your company IF you are prepared to show they were underperforming and that was the official reason given.