Long-service awards & benefit programmes: a guide for employers

What is a long-service award?

Long-service awards celebrate employees for being loyal. Traditionally, awards are given every 5, 10,15, and 40 years of employment. At 25 years, Pepsi Co started the tradition of awarding gold pocket watches. These days though, awards tend to be more practical, and include extra holiday and vouchers.

Why is celebrating long-service important and what are the benefits?

Long-service awards are a great way to maintain a fulfilling and healthy company culture. They're a permanent reminder of an employee’s loyalty and achievements over the years.

Keep in mind that just a few years ago, many organisations were still making a point of offering ‘jobs for life’. But today, the reality of this is much different. To give you an idea of an employee's average length of service, in the UK it’s around 4–5 years. And because of this, long-service awards and how we recognise our employees have needed to adapt. Gone are the days when companies only celebrated an employee’s contributions every few years or so. If you want to keep your people, you need to show your appreciation more regularly.

That said, there’s still a place for long-service awards, and they have many benefits, including:

• Increasing employee engagement
• Reducing turnover
• Reducing knowledge loss
• Enhancing your organisation’s reputation
• Boosting employee morale
• Creating an ever-expanding talent pool

How do long-service awards increase retention?

Long-service awards are still relevant and they do have a positive effect on retention. This is the case despite millennials now making up the majority of the workforce – a demographic who are known to change jobs at least every 5 years or so.

When long-service awards are part of a wider employee experience strategy, they’re highly effective at motivating people to stay in your organisation. Moving to another company loses its appeal when there’s a cost. Especially, if it means forgoing an extra 5 days of annual leave that’s been accrued over several years of service.

What we’re saying is, for long-service awards to be effective they need to be meaningful and add value to your employees’ lives. Of course, champagne and Michelin-starred meals with the directors are wonderful ways to celebrate loyalty. But you should also offer awards that have a long-term impact. According to Employee Benefits, an increase in annual leave is what employees value most.¹ Personalised gifts and public recognition aren’t far behind either.

And if we hone in on the future of the workforce — Gen Z — we recently conducted research showing that almost a fifth of them would accept less money for more time off!

Improving employee experience to boost retention

Because employees move around a lot more than they did before, many organisations are looking at how they can improve employee experience to retain talent.

Instead of just appreciating long service, they’re also focussing on how to reward their teams earlier in the employee journey. Usually, this means offering a competitive benefits package, in addition to flexible working policies and initiatives that enhance wellbeing.

In this instance, all-in-one employee experience platforms offer exceptional value, as everything your teams need is in one place. Take our platform for example. It’s a comprehensive global rewards and benefits solution. With a specific focus on recognition, perks, and wellbeing, the three core elements of employee experience are well covered. Not to mention, everything can be easily accessed from our app, including:

• Perks hub: Employees can redeem discounts on the go, with global brands and high street favourites.
• Wellness hub: Your people can choose from a suite of wellbeing tools, from workout videos, to yoga sessions to meditation.
• Celebration hub: A place where your employees can show appreciation with personalised recognition and meaningful reward. Perfect for celebrating work anniversaries!

How to create a long-service award programme

Creating a long-service award programme is slightly more complicated than it used to be, but don’t let this put you off. It will hugely benefit both your organisation and employees.

1. Think about your strategy

While increasing retention is the obvious main goal, you’ll also need to address other factors, including:

• Additional goals: Apart from increasing retention, what else do you want to achieve? Nurturing future leaders is one example.
• The years of service you want to reward: This may differ between organisations as some industries have higher levels of turnover than others.
• How to engage employees: How will you promote the long-service awards? How do the relevant employees learn about it?
• Building a dedicated team: Who will own your long-service award programme? Will it sit with the employee experience team or HR? Or both?
• The celebration: For example, will you present your awards in a dedicated ceremony, or will it feature as part of a town hall?

2. Choose your awards

The value of the award should increase with years of service. That said, it’s still important to make an effort with smaller awards, even if they don’t cost as much. The more personal the gift is, the better. Of course, this may take some work, but this is why a dedicated team should own the long-service award programme, especially in larger organisations.

3. Pick a date to celebrate your long-serving employees

The date you choose to celebrate your long-serving employees should be the same every year. That way it becomes an event and is fully embedded into your company culture. Some organisations prefer holding events just before or after Christmas. The ideal time will vary between companies though, so choose a date that works best for you.

4. Launch, promote, and measure your long-service award programme

After your long-service award scheme has been launched, it’s important your employees know about it. Places you can promote it include:

• Benefits section of job adverts
• New joiners welcome pack
• A promotional email campaign
• Intranet, social channels, and Culture hub — this is especially good for photos of previous long-service awards, ceremonies, and events

After your employees have received their awards, you should follow up with a survey asking for feedback. This may include asking questions such as:

• Were there any highlights from the award ceremony/event?
• Can we do anything better?
• Would you add anything to the programme?
• Are you happy with your award?

Awards to include in your employee long-service award programme

A long-service award programme should be part of your reward management strategy, so you know exactly who is receiving what and when. There’s nothing worse than giving someone a reward for an incentive, for them to only receive it again as a long-service award.

To ensure this doesn’t happen you should have a variety of options and aim to make each as personal as possible. Examples of what you could include are:

Additional holiday leave and sabbaticals

Holiday leave is the most popular long-service gift among employees. It’s also easily scalable, so both shorter and longer-serving employees can benefit from it. Some organisations add an additional day of annual leave per year, capping it at an amount that won’t be disruptive to business. Then, when a significant long-service milestone is reached, an employee may be able to take a sabbatical, or paid time off for 6 months, for example.

Experience days

Experience days are a great option to reward employees who love trying new things. For the more adventurous there are skydiving or off-road driving days. For foodies, there are cooking courses and wine-tasting events. Either way, experience days are ideal for more personal long-service awards. We’re really not exaggerating when we say there’s something for everyone.

Mini breaks

If you want to give your long-serving employees something more than just additional annual leave, treat them to a long weekend away with a plus one or their family. There are plenty of places in the UK that are brilliant for staycations. But further afield, there are countless European cities to be explored. This is an ideal gift for any employee that loves travelling or wants to revisit their favourite holiday destination.

Hall of fame

Public recognition is one of the most valued long-service awards next to additional annual leave. Often, people wear their years of service as a badge of honour, quite literally sometimes. So having a long-service hall of fame is a great way of showcasing your most loyal staff. Don’t forget, for remote businesses, this doesn't have to be a physical hall of fame. No, it can also be virtual and appear on your website. For an extra special touch give them a framed certificate too.

Gift cards

Some people may groan at the thought of receiving a gift card as a long-service award, but hear us out. Gift cards don’t have to be for everyday purchases and treats. You can use them for courses, holidays, and even subscription services. Some can be worth thousands. Let’s say an employee loves gardening and you’ve learned they want to do a very specific horticultural course. Obviously, contacting them to confirm booking dates gives the surprise away. But with a voucher, they can choose a time that suits them.

Are long-service awards taxable?

If an employee has been with your company for less than 20 years, long-service awards are only taxable if the value of the gift is over £50. This is because anything that costs £50 or less is considered a trivial benefit. The gift also can’t be cash.

Employees who have been with you for 20 years or more, and importantly haven’t received an award in the past 10 years, can receive a larger tax-free gift, providing the amount doesn’t exceed £50 per year of service. Again, the gift can’t be cash.

For example, if someone has worked for 20 years, but has never received an award before, they can receive a tax-free gift of up to £1,000. This is because the £50 allowance has built up over their 20 years of service.²

Reward employees from the start with Perkbox

Every employee deserves recognition for their hard work, regardless of how long they've been at your organisation. When you choose Perkbox, your employees can show each other appreciation whenever they want using Celebration hub. Each personalised recognition they send can be tied to company values. This means wherever your employees are, they know what behaviours drive performance.

We understand that managers also need to reward their teams in real-time and can’t be limited by location. This is why we created the Global Reward feature — a world first. By giving employees Reward points for outstanding work, they have the freedom to either redeem them right away or save them up for something special. All rewards are easily accessible from our Rewards Catalogue.

If you want to learn more about how Perkbox can help you appreciate your long-serving employees, request a demo and a member of our team will get back to you.