UK to Force Big Companies to Publish Worker-to-Boss Pay Gap


Britain’s biggest companies will from 2020 be legally required to publish the gap between the salaries of their chief executives and what they pay their average U.K. workers, under proposed government rules.

Business Minister Greg Clark said that the government would set out new laws in Parliament on Monday directing that U.K.-listed companies with more than 250 employees would have to reveal their pay gaps and justify their CEOs’ salaries.

“We understand the anger of workers and shareholders when bosses’ pay is out of step with company performance,” Clark said in a statement Sunday.

He said the new laws would improve transparency and boost accountability for both shareholders and workers, as well as helping to “build a fairer economy.”

The new measures, which are subject to parliamentary approval, are part of the government’s “Industrial Strategy” and would come into effect January 1, 2019, meaning companies would start reporting in 2020.

When these rules were first proposed last year, they were criticized by union leaders, who said they fell short of Prime Minister Theresa May’s promise early on in her tenure to tackle soaring executive pay.

‘Unacceptable face’ of capitalism

She came to power after the 2016 Brexit vote vowing to tackle what she called the “unacceptable face” of capitalism, including pay gaps and mismanaged takeovers, which had driven a wedge between British bosses and their workers.

But some campaigners and investors have questioned whether the greater transparency provided by disclosures about boss-to-worker pay ratios would be enough to force companies to curb pay excesses.

Matthew Fell, chief U.K. policy director at the Confederation of British Industry, a British employers group, said that the new legislation would help develop a better dialogue between boards and employees.

“What’s most important is that all businesses make progress towards fair and proportionate pay outcomes,” he said.

While Luke Hildyard, director of the High Pay Center, a think tank, said the insight into pay ratios would be useful to investors, workers and wider society.

“We hope that it will initiate a more informed debate about what represents fair, proportionate pay for workers at all levels,” he said.

The plan to make public the worker-to-boss pay gap comes after May has already implemented rules to highlight pay discrepancies between genders.

Earlier this year, all U.K. companies with 250 or more employees had to publish details of the salary difference between male and female employees. They will report back annually on that pay gap.

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