The government has a fair bit of flexibility to cancel contracts without penalty. They usually don't, and of course nobody has ever seen it as this scale.

You're probably correct about the employment law. That will take more legal finesse to keep them from having to pay a ton of money. Fortunately for them they also own the judiciary. It's not 100% reliable, but they've for 4 out of 5 needed votes locked in at the top level