UK companies listed on the stock market and with over 250 employees will now have to annually disclose and explain their top bosses pay and the gap between that and their average worker, the UK government has said.
The pay ratio regulations, which came into force on 1 January 2019, will make it a statutory requirement to disclose annually the ratio of their CEO’s pay to the median, lower quartile and upper quartile pay of their UK employees. Companies will start reporting this in 2020 (covering CEO and employee pay awarded in 2019).
In addition to the reporting of pay ratios, the new laws also require all large companies to report on how its directors take employee and other stakeholder interests into account and require large private companies to report on their corporate governance arrangements.
Business secretary Greg Clark said: “Britain has a well-deserved reputation as one of the most dependable and best places in the world to work, invest and do business and the vast majority of our biggest companies act responsibly, with good business practices.
“The regulations coming into force today will build on our reputation by increasing transparency and boosting accountability at the highest level – giving workers a stronger dialogue and voice in the boardroom and ensuring businesses are accountable for their executive pay.”
He added: “These new regulations are a key part of the wider package of corporate governance upgrades we are bringing forward as a government to help build a stronger, fairer economy that works for businesses and workers.”