Severance pay is any pay or benefits an employer may receive when leaving a company. Severance pay can be given for a variety of reasons. It may simply be the remaining pay they are owed from a final paycheck. It could be the accrued vacation and/or sick time the employee has, which they are legally entitled to when they quit or are terminated from a job. Most severance packages are outline in either an employee handbook or contract with the employer, and these packages can include pay in lieu of a required notice period. Severance could also come from stock options, insurance, or retirement benefits. Most packages deal with employees who are laid of or retiring. When severance pay is given to a terminated employee, it usually comes with stipulations about not suing for wrongful termination.