According to one laid off federal employee,

[Wiz Imp]

40. Yep. The Federal Government has broad discretion to layoff employees.

However, there are still very specific rules they must follow. If they don't follow those rules, then they are very much open to a class action suit. "Firing" employees is more difficult. Firing employees for "poor performance" who can prove they had all outstanding Performance evaluations would almost certainly be considered illegal.

https://crsreports.congress.gov/product/pdf/IF/IF12908
In the federal government, layoffs are referred to as reduction in force (RIF) actions

Retention Registers
After establishing competitive levels, the agency establishes
a retention register for each competitive level. The
retention register is the ranking of each employee subject to
RIF within a competitive level after the agency applies four
retention factors required by law (5 U.S.C. §3502):
1. Tenure of employment,
2. Military preference (also referred to as
veterans’ preference),
3. Length of service, and
4. Efficiency or performance ratings.

https://www.reuters.com/world/us/are-trumps-mass-firings-federal-workers-legal-2025-02-13/#:~:text=As%20president%2C%20Trump%20has%20broad,they%20are%20let%20go%20arbitrarily.
Explainer: Are Trump's mass firings of federal workers legal?

HOW MUCH POWER DOES TRUMP HAVE TO FIRE OR LAY OFF WORKERS?
As president, Trump has broad authority to shrink the federal workforce, but slashing headcount may not be straightforward.

Most civil service employees can be fired legally only for bad performance or misconduct, and they have a host of due process and appeal rights if they are let go arbitrarily. Probationary employees - typically those with less than a year of service - have fewer legal protections.

Federal agencies can trim headcount through so-called reductions in force, but that can be a complicated process governed by rules and regulations dictating the scope and order of firings. The process can take months to a year or longer, and employees must be given notice and in some cases the opportunity to take a different government job.

Federal employees can appeal firings to the Merit Systems Protection Board, an independent agency that enforces laws protecting civil service workers from political retaliation and other prohibited employment practices.