Comment by socksy

As in, they would have to prove, potentially in court, that the layoff was absolutely necessary to actually be about to do it, plus pay an undefined fair severance amount (that people mostly seem to accept as 0.5 * monthly salary * years of tenure at the company), on top of the on-average 3 month notice period, which most companies will give as garden leave in order to not reduce morale even further.

If you can't prove that you need to cut the person for "operational" reasons (e.g. because you're not really getting rid of python tooling engineers), then your best bet is to dangle large cash offers to people in order to entice them to quit.

If they do manage to prove they need to do layoffs, for example when the company is literally running out of money, then they're not allowed to just lay off employees as they like (and definitely not in relation to performance). Instead they have to follow the "Sozialauswahl" which means that factors like whether the employee is supporting a family, is older, etc need to be taken into account.

Then on top of all that, they won't be able to hire people even for completely unrelated roles, for some amount of time afterwards.

So all in all there's a few disincentives for layoffs to be considered as a first action (it's not stopped it from happening at a bunch of companies lately though, Bosch, SoundCloud, Ableton, Native Instruments, Personio, Pitch etc).