The notion that an employee at a company deserves special treatment over other employees if they've been with the company longer. Usually, this is in the form of a higher salary, better benefits, bigger offices or increased chance of promotion.
To some degree, seniority makes sense. The longer a person has been with a company, the more they understand how it works. In theory, by knowing the ins and outs of the company, by knowing its shortcomings and its strengths, and by learning first-hand how things are really done at the company, a senior employee is more efficient, more capable, and more experienced.
In reality, however, seniority can be a self-defeating advantage to bestow upon the employee. He or she may become lazy or disillusioned, simply because seniority reduces the chances of being fired. His or her knowledge of new technology or business practices may become obsolete, and with seniority he or she may be less inclined to get training or return to schooling.
In some industries, seniority works well, inspiring loyalty and dedication. In other industries, particularly in computer or high-tech related fields, seniority can become a burden, and all employess should be judged on merits alone.