New Zealand Law
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There is no entitlement to a severance package, which is really a form of redundancy payment. This can only be an entitlement when there is a specific term in his employment contract. I appreciate that this is a family situation, but in terms of employment law, if he has chosen to resign then all he is entitled to is his pay up to the date he finishes and any accrued holiday pay. There is no legal entitlement to any other payment like severance pay. So you can tell him that employment law is very clear that there is no entitlement, and that while the family relationship is important, it could conceivably be a breach of your duties as directors of the company to make a payment like this was no entitlement. You also need to fix a date when he finishes normally up to 4 weeks from resignation would be appropriate. So the next step will be to tell him the finish date and that he won't be entitled to any other payment