Under the Equality Act 2010, treating workers less favourably than others on the basis of age is unlawful discrimination. But many employers in the UK award some of their employee benefits on the basis of length of service. Clearly younger workers are less likely to have achieved long service and therefore less likely to benefit from any service-related enhancements. So isn’t this unlawful discrimination?
Fortunately there is no need to rush to scrap your enhanced benefits. There is an exemption made within the Equality Act enabling employers to have some limited service-related benefits, however it’s not a blanket exemption so you need to make sure you are still operating lawfully.
Up to five years’ service
If the benefits you award based on length of service require service of up to five years only, you are fine. Holiday is the typical example – some employers award additional holiday days based on length of service and this is perfectly acceptable up to the five year point as the Equality Act specifies these as being acceptable.
Longer than five years’ service
If you want to award extra holiday based on achieving longer service than five years, you need to be able to demonstrate that you reasonably believe doing so fulfils a business need. When thinking of giving more holiday for long service, you are probably endeavouring to reward loyalty and commitment. But your own opinion that doing so has benefits to the business isn’t sufficient, you’d need some evidence that the business benefits from that decision.
Gifts and awards
Many employers like to mark milestones of long service with gifts, bonuses, or similar. But these types of awards are subject to the same rules. If the awards are for service up to five years there is no issue, but longer than that (as these typically are), there needs to be a business benefit just as there would for increased holiday over the five year mark.
What evidence is required?
The good news is that the standard of proof for demonstrating a business benefit to long-service awards is not nearly as high as it would be to justify treating people less favourably on the basis of age or another protected characteristic in another way. However you do need evidence that you have actively considered the business need and have reason to believe it will bring the desired benefit.
Your own opinion is not sufficient but something like staff surveys or focus groups where the issue is discussed and noted would help ensure that if challenged, you can demonstrate that your long-service award is meeting a genuine business need.
If you’re not sure whether your service-related benefits are lawful under the Equality Act and think you may be vulnerable, do get in touch for some advice.