IDS HR Studies Update 791, February 2005

Long service awards

• Details the form, frequency and value of long service awards in 17 organisations
• Considers what typically constitutes long service for award purposes
• Examines scheme administration, including the option of outsourcing
• Outlines the Inland Revenue's statutory tax exemption for non-cash long service testimonial awards.

While a job for life is something of an unfashionable concept, the reality is that many employees still clock up long service with a single employer. And long service awards are still a popular means of recognising this loyalty and signalling to staff that their commitment over many years has been highly valued.

The simplest form of award may be a cash payment, but long service awards more often take the form of non-cash gifts, reflecting Inland Revenue tax exemptions. Providing certain conditions are met, these allow employers to reward staff with at least 20 years' service with gifts worth up to £50 in value for each year of service tax-free.

Rewarding staff is now rarely a case of giving an employee a traditional gift such as a carriage clock and staff typically have a far wider choice of the gift they receive (up to a designated value). Meanwhile, larger organisations now often look to reduce the administrative burden on HR by outsourcing awards, increasingly by adopting online schemes. Another trend in some companies is to make awards earlier in employees' careers (say after ten years' service) and more frequently thereafter.

This in-depth article is the lead feature in the February 2005 IDS HR Studies Update.