Bealzebub,
You might be right, but if the age regualtions are interpreted the same way as the sex, race and other similar regulations, the problem comes with indirect discrimination. Policies which are based on length of service will by nature indirectly discriminate against younger people as they will normally make up the highest proportion of those at the bottom end of the service ladder. There have been similar arguments in sex discrimination cases where women have successfully claimed that they have been indirectly discriminated against because women generally cannot achieve the same length of service as men due to taking career breaks.
Similarly I am not convinced that it must reasonably appear to the employer that this employee is not placed at a disadvantage except that he can do so to reward the longer serving employees experience, loyalty or motivation, and in so doing it fulfills a business need of the employers undertaking. How do you objectively differentiate between the experience, loyalty and motivation of people with 8, 13 and 17 years service. It is goes against common sense to say that the these three qualities will all be uniformaly enhanced through people having longer service.
RHRP