

Retaining employees has real benefits, including financial incentives for keeping your best people around. Long Service Awards (LSA) are an important way to recognise employee loyalty.
Typically delivered at intervals of five years, Long Service Awards mark an important milestone. The longer an employee has been with your organisation, the greater their understanding of your mission. At Mo, we see the importance of appreciating loyal employees every day. Our customers save on recruitment costs by driving down attrition rates – and meaningful Long Service Awards are an important part of that picture.
However, the work landscape is changing. In 2025, it is rarer for employees to stay in one role for long periods. Gallup has dubbed millennials as the “job-hopping generation”. Many people will never receive a Long Service Award, either because they move jobs in search of a better salary or due to fluctuations in the market. Redundancies are rising in tech, known as the “lay-off surge of 2024.” If you ask most millennial or Gen Z employees about the idea of staying at a company for five, ten or fifteen years, they may laugh at you. So what is the role of Long Service Awards today?
In this article, we will break down the importance of Long Service Awards in different business structures, including ways to streamline the admin process. As experts in employee recognition, we will also outline ways to reduce attrition rates in the years before Long Service Awards become applicable, helping your leaders make effective decisions about what to prioritise in your HR budgets.
As usual, we’re here to answer any questions about ways to retain employees and simplify your Employee Rewards systems.
Why Are Long Service Awards Important?
Long service award schemes offer the perfect opportunity to show employees how much you appreciate their efforts. Employees who feel recognised and appreciated are much more likely to stick around. HR Today reported that recognition is key to employee retention. Awards for long tenure should be part of any robust employee recognition program.
What is An Example of a Long Service Award?
A Long Service Award program is a great way to strengthen employee loyalty. Employee rewards improve feelings of fulfilment, which is shown to improve engagement in the workplace. Both of these effects have a significant impact on day-to-day performance and productivity.
Offering Long Service Awards is good for employees and benefits your bottom line. Before we break down the business case, let’s look at the perks for staff: Long Service Awards incentivise employees to remain loyal, helping stabilise their lives and incomes. In exchange for resisting the urge to job-hop, employees are given periodic bonuses beyond annual salary reviews. Not only that, Long Service Awards are examples of public recognition, making them feel valued by the company as a whole and even increasing their status.
The positive effects of Long Service Awards for employers are just as clear:
- Your company becomes more attractive to applicants
- Veteran employees can mentor new starts
- Attrition goes down
- The costs of recruitment decreases
- Teams and projects remain stable
Two-thirds of employers already offer long service awards. For the program to be truly beneficial, it needs to feel like more than a simple box-ticking exercise. The more personal you can make your awards, the more impact they will have on the receiver.
Ideas for Meaningful Long Service Awards
1. Cash Awards
A cash award can be a nice way to reward your staff. It gives people the freedom to put their award to something they actually want, instead of merely getting a discount on something that they have no use for.
However, cash can feel impersonal. Give it out too often and employees begin to expect it, as if it were part of their salary. If that happens, the positive impacts of incentivisation start to diminish. That’s why it’s important to think of a number and cadence that has a real impact in comparison to their current compensation.
If you choose cash awards, you may want to find other ways to recognise day-to-day employee efforts, such as verbal recognition or a points system. Many organisations find success by implementing peer-to-peer rewards, giving their people a small budget to share among their colleagues every month.
2. Non-cash Awards
Never underestimate the impact of non-cash awards on employees. After all, salary isn’t everything these days. Many employees are seeking a better work-life balance, and small tokens can have real effect over time. Non-cash rewards can also be much more tailored, allowing your HR leaders to choose an experience or rewards that employees genuinely value. A few of our favourites include:
- Gift cards – There’s a much higher chance that employees will enjoy spending their award on something they want. This means they won’t risk losing it in the monthly bills.
- Vouchers – These are especially great if you know that someone has a particularly big purchase they’re saving for.
- Physical items – This could be anything from the traditional pen or watch to something more unusual, like an exotic houseplant or a bit of sporting equipment.
- Experiences – From spa days to tickets to exciting sporting events or even a weekend break, experiences can make some truly precious memories.
3. Workplace and Wellness Rewards
HR Leaders can also offer Long Service Awards directly related to your workplace. These may be easier for you to budget for and some offer significant benefits in terms of general well-being and happiness. Workplace and Wellbeing Rewards include things like:
- Additional holiday days – These could be an annual benefit, if your organisation is able, or a one-off bonus holiday allocation the year of an award.
- Flexible work arrangements – You could reward long-serving employees with even more flexibility and freedom in their working arrangements.
- Mentoring opportunities – Mentoring and coaching can be extremely valuable experiences for employees, especially ones who may be looking for new challenges.
- A reserved parking spot – Perfect for organisations where a parking spot could make all the difference.
Are Long Service Awards Still Useful in Today’s Workplace?
As we mentioned in the introduction, it can seem useless to offer Long Service Awards when many employees don’t make it past a few years. While it’s true that many industries are volatile at the moment, it’s not yet time to write off the Long Service Award. Instead, consider integrating it into a larger employee recognition and reward program.
For example, you can offer peer-to-peer rewards, Annual Awards and Long Service Awards on a single platform with Mo. We integrate seamlessly with your HRIS software, making it easy to switch over.
How to Present Long Service Awards
In addition to choosing the rewards themselves, be sure to have a plan in place for public recognition. Some people love public recognition at a company-wide meeting, others want nothing less. Either way, always make sure they get a mention in your company newsletter and a shoutout on your employee communication platform.
No matter how you present your awards, be sure it’s as personal and meaningful as possible. Mention the employee’s achievements and specify things they’ve contributed to or excelled at over the years. It’s also a nice idea to gather memories from colleagues by asking them to sign a card and share any special photos they have.
Tips for a Successful Long-service Award Program
To create a long-service award program that’s truly successful, be sure to:
Step 1: Get Employee Input
The only way to know for sure whether your ideas and awards are meaningful to employees is to ask them. Send out a survey or use a Boost in your Mo platform to find out what really motivates your teams.
Step 2: Be Creative With Your Long Service Awards
The more imaginative and fitting your awards are with your company culture, the more people will enjoy them. If you are a healthcare company, it makes sense to incentivise people with wellness experiences. Equally, if you work in sustainability, it might not track to offer Amazon gift cards.
Step 3: Make Long Service Awards Transparent and Fair
Personalise awards. Be clear about the levels and not show favouritism. If it seems like you are simply rewarding people for being close to leadership, the whole program may backfire. That’s why it’s important to have different types of rewards programs, ensuring that employees feel recognised at every level of the organisation.
Step 4: Promote Your Long Service Awards Program
Employees will only be excited about receiving these awards if they know they exist. Promote the program and create a little fanfare when giving awards.
Step 5: Recognise Employees Throughout the Year
Long service awards shouldn’t be the only time you’re showing your appreciation. Recognise your employees regularly to boost your program as well as overall engagement. Check out some thoughtful recognition ideas to spread throughout the year.
Tax Implications for Long Service Awards in the UK
There are various rules governing tax implications of long service awards. For the full details, visit the government website.
1. Cash Awards
Cash awards are typically considered taxable income in the UK. This means that the employee is required to pay income tax and National Insurance contributions on the monetary value of the award, this will normally be deducted as normal on payroll and they’ll be able to see any tax charged on their pay slip.
For these, you must add the amount to your employee’s other earnings, and deduct and pay Class 1 National Insurance and PAYE tax through payroll. You must report long-service awards if they are a part of a salary sacrifice arrangement.
Example:
Picture an employee who has dedicated 25 years to their employer. The employer presents them with a non-monetary long service award worth £1,250. For the first 20 years of service, the employee is exempt from income tax and National Insurance payments on the award’s value, up to £1,000 (£50 x 20 years of service). However, the remaining £250 is taxable, and the employee must pay income tax and National Insurance on that amount.
That said, a gift voucher of £50 can be given tax-free to employees as a bonus or award no matter how long they’ve been with you – as long as they aren’t part of a salary sacrifice arrangement.
2. Non-monetary Awards
Non-monetary awards, such as vouchers, gift cards, and physical items, are also subject to taxation. However, there is a tax exemption for non-monetary long service awards of up to £50 per year of service. So, employees are exempt from income tax and National Insurance payments on the value of the award, as long as it doesn’t exceed £50 for each year of service, and as long as you haven’t given them a long-service award in the last 10 years.
To qualify for this tax exemption, the following conditions must be met:
- The employee must have at least 20 years of service with the same employer.
- The employee should not have received a long service award from the same employer within the past decade.
- The award must be valued at less than £50 for each year of service.
- In cases where the non-monetary award surpasses £50 per year of service, the excess amount is subject to taxation as a “benefit in kind.”
- Even if the award is tax-exempt, you must report the amount on form P11D.
3. Responsibilities for Employers
Employers bear the responsibility of reporting long service awards to HMRC. This can be accomplished by including the award’s value on the employee’s P11D form.
4. Responsibilities for Employees
Employees are advised to maintain a record of all long service awards they receive. This makes it easier to calculate their income tax and National Insurance obligations.
In cases of uncertainty regarding the tax implications of a long-service award, it is advisable to seek professional guidance associated with tax rules.
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