Severance payments

Under the Fair Work Act, and the National Employment Standards, an employer must give notice of termination of employment (unless the dismissal is a summary dismissal for, say, gross misconduct which constitutes a repudiation of the contract of employment by the employee,) and the length of that notice depends upon the length of the employee’s service with the employer. For less than one year’s service the minimum notice is one week, between one and three years it is two weeks, between three and five years it is three weeks and more than five years it is four weeks.
These are statutory minima.
The law also requires that the notice be in writing.
An employer does have the alternative right to pay what the employee would have earned during that term in lieu of requiring the employee to present for work, called a payment in lieu.
It is this payment in lieu which is often referred to as a severance payment and the term also includes any ex gratia payment made on top of the statutory minima.
These entitlements are quite seperate from and additional to redundacy entitlements.
An employer will sometimes be advised to make an additional ex gratia payment as a sweetener in the hope of avoiding proceedings for unfair dismissal; and this can be a good investment in certain circumstances.