ESA - ex-gratia payment by employer

tenant claims ESA income related, been employed during last 7 yrs but off sick for all of it, employer wants to terminate employment without notice and then pay ex gratia payment 4 months after termination date equating to 12 weeks pay which they say is lump sum tax free equivalent to 12 wks gross pay.

From what I can determine it would only count as earnings for 1 week only pg 290 CPAG handbook 13/14 edition

Does anyone know if I have read this correctly

thanks

Where notice is not given an employee is entitled to Pay in Lieu of Notice (PILON). If the employment was remunerative i.e. over 16 hours a week, then PILON is disregarded for ESA IR. ESA regs 95(1)(c) and schedule 7 para 2.