A seniority list, while it's application may vary, is a list of pilots in the order they joined the company, so in your above senerio, the long-serving FO will be ahead of the DEC Captain on the seniority list.
How this effects schedules, pay, promotion etc. varies from company to company.
In EK, the senior FO is still, well, senior to any Captain that joined after him. This has some advantages with bidding, staff travel etc.