When an employee wants to leave before their notice period ends, a buyout lets them shorten it by compensating the employer for the unserved portion. The amount is usually equivalent to the salary that would have been earned during those days, and is typically settled by deduction from the final payment.
Who pays whom
The direction of payment is the thing people most often get backwards. In a buyout, the employee compensates the employer, because it is the employee shortening the notice. This is the opposite of payment in lieu of notice, where the employer ends employment immediately and pays the employee for the notice they will not work.
Where it is common
The practice is most established in India, where notice periods of one to three months are normal and an incoming employer will sometimes reimburse the buyout as a hiring incentive. It appears elsewhere too, but many jurisdictions restrict or prohibit deducting from final pay without explicit consent, so it cannot be assumed to be available.
Why it matters when hiring internationally
Long notice periods are a genuine obstacle when hiring in some markets, and candidates will ask whether a buyout is possible before accepting an offer. Whether you can enforce or accept one depends on local law and on the contract wording, so it is a question for the legal employer rather than a matter of company policy.