Are long-service awards incompatible with the Equality Act 2010?

No, long-service awards are not necessarily incompatible with the age discrimination provisions of the Equality Act 2010. Service-related benefits - although not age-related benefits - are subject to a limited exemption contained in para.10 of sch.9 to the Equality Act 2010. The exemption means that long-service awards such as additional holiday or pay are allowed, provided that they are awarded on the basis of service of five years or less. If this is the case, no further justification is required.

The five years of service can be either the length of time that the worker has worked at or above a particular level in the business, or the length of time the worker has been working for the employer in total. A different method can be adopted in relation to different benefits. In calculating the length of time that a worker has been working, the employer may discount any period during which the worker was absent, unless, in all the circumstances, it would not be reasonable to do so.

In addition, there is a general exception for all other service-related benefits, provided that it reasonably appears to the employer that the way in which it uses the criterion of length of service fulfils a business need of the undertaking, for example by encouraging the loyalty or motivation, or rewarding the experience, of some or all of its workers. In order to meet these requirements, the employer would need evidence from which it can conclude that there is a benefit to the business. This could include information gathered through monitoring or staff engagement surveys.

The service-related exception does not apply to service-related benefits arising as a result of termination of employment, for example redundancy pay.