Severance pay is the pay that companies give to their employee when they are leaving the company. In the context of the law, many employers are contractually obligated to give their employees severance pay. However, not all employment contracts have a severance pay obligation for employers when their employees leave the company.
Severance pay is often equal to one week's wages for every year that the employee was at the company. However, if the employee was a senior executive, then this figure can be larger. In fact, it can be more along the lines of one month's pay for every week that the employee was at the company.
If an employee is entitled to severance pay, and they don't receive it, then they may sue the company to claim it.