I am interested to see this. I am posting from the United States and our laws are a little different. Some of the requirements have to do with Age, and the Older Worker's Act. Amongst other things, This allows an employee (in the US) certain protections if they sign a severance agreement that can but does not have to include compensation. Generally, employees won't sign something if they aren't given something in return so compensation is included. They have 21 days to decide to sign if they are over 40. In the case of a mass reduction in force (WARN) then it's 45 days for all workers. They will then have 7 days after signature to return any compensation and decide to sue. These are not considered a voluntary termination but most of the time they are not a termination with cause. Termination without cause for Lack of Work or a reduction in force is sometimes used for discharges that have performance issue overtones but I discourage that. If it walks like a duck, then it needs to be a duck. For executive terminations, there could be a settlement that occurs to defray potential legal liability.
In USA, while we do have certain laws, the ability for the employee to fight the termination and stay employed is very uneven. By then, the relationship has soured. Unless it is a true Title VII Civil Rights Act violation or Hostile Work Environment situation, it's very difficult for the employee to fight and win an "unfair" termination. Unfair doesn't mean illegal. Therefore, in this country, it's not really the best option for the employee to try to sue instead of taking the settlement so long as it isn't a violation of their civil rights. If it is, I would advise them to go to the EEOC or a Civil Rights Attorney. Does India have such a vehicle to assist employees? Thanks for letting me share.