Where it is a company's policy to give a small gift to employees who have completed periods of service of multiples of 10 years could this be discriminatory under the Equality Act 2010?
A benefit based on length of service may indirectly discriminate against younger workers, however gifts to recognise long service may fall within the "business need" exception for service-related benefits. Paragraph 10 of sch.9 to the Equality Act 2010 provides an absolute exception from the Act for service-related benefits awarded by reference to a length of service criterion of up to five years. It also allows a length of service criterion of more than five years where it "reasonably appears" to the employer that the way in which the criterion is used "fulfils a business need". Examples of business needs include encouraging the loyalty or motivation, or rewarding the experience, of some or all of its workers. The "business need" test is not the same as the standard age discrimination objective justification test, because there is no requirement to show proportionality. The standard of proof necessary for an employer to take advantage of this exception is, therefore, lower.
Many benefits based on length of service arguably seek to reward loyalty or experience. However, the employer will still need evidence from which it can reasonably conclude that there is a benefit to the business. This might include information gathered through monitoring, staff attitude surveys or focus groups. The employer should, therefore, go through a process of actively considering whether or not the long-service criterion it imposes for receipt of a gift every 10 years does actually fulfil a business need, and should set out in writing its reasoning and conclusions.