Unless something has changed drastically since I worked at MS, they absolutely can do mass layoffs without having to buy out contracts.

Sure they offer severance, industry norm is usually 1-2 weeks of severence per year of employment, but in no way are they contractually limited to only lay people off for cause.

Firing an individual is different, on that front they are careful how its handled to avoid being sued and having to settle. Employment laws also vary by country, I'm mostly familiar with US laws.