Do you have any reliable source for this? as it's fairly common in the industry. I know lots of things are common that turn out to be illegal, but this one is ripe to be tested time and again, and the fact that it's still being used implies that those challenges failed.

Hardly. Severence is non-statutory (aka optional), and those terms are quid-pro-quo and perfectly fine.

If the employee doesn’t like the terms, they’ll just get the statutory minimum.

It’s pretty rare anyone takes that option though!

You might be right but a lot of this stuff is based on the calculation that most people do not have the assets to wage a lengthy legal battle when they’re newly unemployed. I’ve heard a lot of stories about wildly illegal things which either went completely unchallenged or became moot because the company went busy with no assets.

Just realized, but to late to edit, that I based my original comment on my home country. And that is not the US. Over here, even hardcore PIPs are regularly thrown out by courts as grounds for termination.