Laying off for poor performance is illegal, and the establishment may face legal consequences. As per the definition, the 'lay-off' occurs when an establishment experiences a failure, refusal, or inability of an employer due to factors such as a shortage of coal, power, or raw materials, accumulation of stocks, breakdown of machinery, natural calamity, or any other reason not related to "Poor Performance."
The removal of an employee based on poor performance is a vague idea. Are you certain that a new employee would meet your expectations if you were to replace the poor performer? The employee being removed for poor performance was once selected by you for your establishment. It is always a wiser decision to evaluate the employee's performance, understand why they failed, identify the possible causes of failure, and assess any shortcomings on the employer's side. Without conducting a thorough analysis of the situation, you will continue to struggle. It would be more beneficial to identify the causes, implement remedial actions for employees with poor performance, and help them improve for better performance.