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Employment law: Major changes came into force 1 October

Several of the Government's key employment law reforms came into force on 1 October 2013, reports The Chartered Institute of Personnel and Development.

Yesterday saw three major changes to employment law, following on from the introduction of the employee shareholder contract at the beginning of September 2013.

Enterprise and Regulatory Reform Act 2013

This month sees shareholders given greater power to determine the pay of a listed company's senior executives as part of the Enterprise and Regulatory Reform Act 2013.

The new system is designed to create a better link between the pay of directors and executives, and the performance of the company.

Under the new system a board of directors will have to persuade their shareholders to support any large pay increases to senior management. If they fail then management pay will be frozen until an agreement can be reached.

Quoted companies will now have to produce remuneration policy reports that clearly set out to shareholders how directors' pay is calculated and how it relates to the long-term performance of the company. Companies will be obliged to give a 'single figure' that represents the total remuneration received over a year.

The reports will also need to detail all possible elements of pay that a director could receive in the coming year, including bonuses and any potential severance settlement, even if a departure from the company is not anticipated.

"Investors and businesses agree that the link between top pay and long-term company performance needs to be re-established to mitigate against directors focusing on achieving short-term goals," said the Government in a note accompanying the changes.

National minimum wage

The second major change to employment law will see the National Minimum Wage rise in a bid to improve the lot of the lowest paid workers. The new rate will be £6.31 for those aged 21 and over, an increase of 12p an hour on the previous level.

The rate will also increase for those aged 18 to 20, going up by 5p per hour to £5.03. The rate for 16 and 17 year olds is increasing by 4p to £3.72, and the rate for apprentices is increasing by 3p to £2.68.

Third-party harassment

The final major change to employment law that came into force yesterday is the scrapping of provisions in the Equality Act 2010 that made an employer liable for harassment by third parties.

The law had previously been used to punish a company that permitted comedian Bernard Manning to racially abuse an employee at a dinner event, with the court ruling that the company had sufficient control over the event to have prevented the abuse that occurred.

The Government repealed the provision as part of a bid to simplify the law, believing that it had done little to protect employees and was seldom used.

It is thought that employers could continue to be held liable for the harassment of employees by third parties under different legislation.

Elizabeth Slattery is a partner at law firm Hogan Lovells.

"The repeal of the third-party harassment provisions is not the end of the story for employers," she told The Lawyer.

"Other legal avenues are available to an employee who believes they have been harassed by a third party," she added.