Hello again and thank you for the additional information, it was helpful. I understand what is happening. In essence the employer is asking him to waive his rights under the old contract in exchange for continued employment. That, unfortunately, is lawful, as long as they are not breaching the old contract in terms of the way in which they are terminating it. If they are not, and they have a right to terminate the contract or not, your family member has a choice. That is either to walk away from the job now and to receive his severance payments or to waive those payments in exchange for a new contract/job with the employer.
I might recommend that he take the contracts, both of them old and new, to a local employment law
attorney who can actually read them apart and together in light of his job, status, what he has been told about his position/program ending, and then see if the attorney can find any way that he can have both the severance and continued employment.
I am guessing that the original contract, which hired him when was here on a work visa says something about how payment of the severance will be made and that is what they are hanging their hats on when they say he doesn't get the severance unless he leaves the country. But again, I highly recommend he have a local attorney read both of those contracts.
Please let me know if you need any clarification. I would be glad to assist you further if I can.