json_encode produce JSON_ERROR_UTF8 from MSSQL-SELECT
Before you JSON encode, use utf8_encode()
around the string.
You can just set this in your connection also:
$result = sqlsrv_connect($hostname, array( 'UID' => $username, 'PWD' => $password, 'Database' => $database, "CharacterSet" => "UTF-8" // <---- here the magic happens ));
For me, this is the easer way.