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The human resource department of most large companies I've worked for will celebrate employees five, ten, fifteen year anniversaries and so on with a company wide celebration and gift or plaque. This is fine at the corporate wide level but more attention should be given at the departmental or group level every year if you want to keep employees around. Its good for morale.

Should coworkers celebrate one another. For the average organization I would say its up to the department manager to celebrate the employee's anniversary. Coworkers should congratulate one another but nothing more is mandatory at the peer level.