Case: A former teacher (=pl) for a private, government-supported school system (=def) is suing def for severance pay some twenty years after stopping to work, claiming that he was fired. Def counters that they are required to pay and points out that the statute of limitation for such a claim according to the law of the land is seven years.

Ruling: [As we have discussed several times in the past,] the practice of severance pay is not a Torah law but is based on the precedent of the parting presents a Jewish servant received upon being set free. It is considered binding based on local practice in many parts of the Jewish world, including by the Israeli law, in the case of reaching retirement age and upon one being fired. It seems to be an example of forcing one to pay money lifnim mishurat hadin (above the letter of the law), but according to many poskim one cannot force such a payment (see Rama, Choshen Mishpat 12:2). Therefore it must be based on custom, which is binding in many areas of monetary law, certainly including the laws of workers.
One major outcome of the fact that this practice is based on custom is that it should follow to the end the guidelines of the custom, as the Rivash (477) posited, on a general basis, regarding monetary customs. Although the Rivash says that the idea of being linked fully to the custom does not apply to customs that are based on natural morality, Acharonim assume that it applies to all customs. Therefore, the statute of limitation should apply here. We should also point out that statute of limitation has a logical basis that is similar to a Talmudic concept. The issue is that one is required to keep financial records for up to seven years and no more. Thus, it is possible that def, or others in parallel cases, had proof of payment that are no longer available. This is similar to the halacha that since one preserves his purchase contracts for up to three years, one who has occupied a field for longer than that can say that he had proof of purchase that is no longer available (Bava Batra 29a).
Def also claims that pl quit and was not fired, and thus does not deserve severance pay. If there were a full obligation, we would not say that the fact that he did not make the claim is a clear sign that the debt no longer exists, as it is possible that, for example, there was a contract that was lost and later found (Rosh, cited by S’ma 69:19). However, regarding a case like this, where there never was a contract, there are grounds for suspecting that the fact that pl made the claim so many years late, even though the practice of severance is a known one and pl is the type of person who is aware of his rights, shows that he was never owed. Therefore, there are also grounds to suspect that he indeed quit and does not deserve severance pay, which is thus another reason to deny his claim.