Big companies to disclose pay gap between chief execs and employees
Big companies will be forced to disclose and justify the gap between their chief executives’ salaries and the pay of their average UK employee, under new laws.
The proposals, due to go before parliament today (June 11), will affect listed businesses with over 250 staff.
They follow concerns that some bosses have received salaries that are out-of-step with the performance of the company.
If approved, the laws will mark the first time big firms have had to disclose these differences in pay, or ‘pay ratios’.
The Government said the reforms, part of its Industrial Strategy, will hold big businesses to account and give staff a greater voice in the boardroom.
Greg Clark MP, Secretary of State for Business, Energy and Industrial Strategy, said: “One of Britain’s biggest assets in competing in the global economy is our deserved reputation for being a dependable and confident place in which to do business.
“Most of the UK’s largest companies get their business practices right but we understand the anger of workers and shareholders when bosses’ pay is out of step with company performance.”
He added: “Requiring large companies to publish their pay gaps will build on that reputation by improving transparency and boosting accountability at the highest levels, while helping build a fairer economy that works for everyone.”
The regulations would come into effect from January 1 next year, with the first pay ratios reported in 2020.