Starting point, there is a difference in law between service pay and severance pay.

1. Service pay - paid when you leave employment voluntarly.It had good intentions for employees to benefit form the employer as they leave. However, the clause (employment act 35... and more specific 35 (5) & (6) rendered its payment not possible.

2. Severance pay - paid when you leave employment due to retrenchment, redudancy or lay-off (basically same things). This is very clear in the employment act 40. The payment is a a minimum is 1 months notice in lieu of notice and a minimum of 15 days pay for every year work at current salaries.

3. All payments are subject to taxation.