UK companies to publish worker to boss pay gap
Britain’s largest companies will soon need to be required to publish the pay discrepancy between the honcho and the average UK worker.
New government rules propose that UK-listed organisations with more than 250 employees will have to reveal the pay gap – and in doing so, justify the salary paid out to the chief executive.
"We understand the anger of workers and shareholders when bosses' pay is out of step with company performance," said Greg Clark, the UK’s business minister. He added that the increased transparency would lead to greater accountability for workers as well as shareholders, and also contribute to building a “fairer economy”.
The new laws are still subject to parliamentary approval, and are part of the British governments “Industrial Strategy” plan. If they do pass approval, they will kick in from January 1 next year – which will mean that companies need to start reporting in 2020.
The affected companies are already required to annually publish details of the gender pay gap within their organisation, following another set of new rules that kicked in earlier this year.
Response to the new rules has been cautiously optimistic.
"We hope that it will initiate a more informed debate about what represents fair, proportionate pay for workers at all levels," said Luke Hildyard, director of High Pay Centre, an independent, non-partisan think-tank that focuses on “pay at the top of the income scale”.
Matthew Fell, chief UK policy director at the Confederation of British Industry, which is a British employers group, was similarly hopeful that the increased transparency will lead to concrete action towards fair pay.
"What's most important is that all businesses make progress toward fair and proportionate pay outcomes," he said.
In the US, public companies have also had to reveal CEO-to-employee pay ratios in their proxy statements for the last fiscal year.