Seniority based benefits have some 'merit'. Theoretically, a 20 year employee has contributed more to the success of the company than a 10 year employee so should receive the results of the success sooner (or greater). Also, the track record of the 20 year employee is more defined/established so it is more predictable that he/she would continue to be productive to the company. Further, the body of knowledge about the company and its operation is greater with the 20 year employee so that is more of an asset to the company and deserves more compensation. And since compensation includes more than dollars, it makes sense that the senior employee be more compensated in terms of vacation/schedule/perks also.