RegulationAug 29 2017

Government to force listed companies to reveal pay gap

Search sponsored by
Government to force listed companies to reveal pay gap

Companies will have to publish the ratio between the pay of highest paid employees and the lowest paid, under new plans announced by the government.

The plans, announced this morning by Greg Clark, Secretary of State for Business, Energy and Industrial Strategy, would also involve publishing a register of listed companies where a fifth of shareholders have voted against the level of executive pay.

The register will be introduced in the autumn and overseen by the Investment Association, a trade body that represents fund houses.

New regulations will also be introduced requiring companies to either appoint a non-executive director to act in the interests of the employees, set up an employee advisory council, or nominate an employee as a director.

Mr Clark 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.

"We have maintained such a reputation by keeping our corporate governance framework under review. Today’s reforms will build on our strong reputation and ensure our largest companies are more transparent and accountable to their employees and shareholders."

As well as publishing data about their pay ratios, the 900 companies listed in the UK will also have to justify it.

Stephen Martin, director general of the Institute of Directors said: “We welcome the pragmatic approach the Government is taking to improve how company boards work. We’re particularly pleased that there will be a code for large private businesses, as the principles of good governance should extend beyond the companies listed on the stock market.”

Len McCluskey, general secretary of Unite, a trade union, said: “The government's proposals on corporate pay will not achieve the change needed to bridge the gap between excessive boardroom rewards and meagre wages for workers.”

The government intends to bring these reforms into effect by June 2018.