I don't think that's correct, or at least not everywhere. From what I get, when you're laying off people for economic reasons, you need to make vertical cuts of services or roles that underperform economically, but you can't use individual performance as the basis.
I agree. My understanding of layoffs is you're closing out the role, and thus, the person holding the role loses it. This is separate from the actual performance of said person. Conversely, for a poor performer, you're cutting off the person but intend to refill the role with a better one.
Going from 10 people on a team to 8 and not planning to re-hire back up to 10 is also closing out roles.
Legal details and jurisdictions may vary, but as far as I know, you can absolutely cut part of a group (or part of the entire company), not just entire groups/divisions/etc. And you can apply uniform company-wide criteria to select the subset of the group to lay off.
I’ve seen another loophole here. The pre-layoff restructuring that moves low performers into a restructured business vertical that is intentionally designed to look like it’s all economics for this purpose but really functions as a purge.