Bosses could be forced to reveal pay gap

Large companies will have to reveal the pay gap between their chief executives and the average worker under proposed new laws.

Under UK Government plans to be laid before Parliament tomorrow, directors will also be forced to spell out how they are acting in the interests of employees and shareholders.

The move follows concerns that some bosses have been receiving inflated salaries that don’t match company performance.

UK Government Minister Lord Duncan said: “It only takes poor behaviour from a small number of companies to damage the public’s trust in big business.

“These new laws will ensure that differences in salary within large companies across Scotland and the whole of the UK – and the reasons for the variations – will be there for all to see.”

Under the changes, UK-listed companies with more than 250 UK employees will have to disclose and explain pay ratios, the difference between what executives and workers earn, every year.

The new regulations will come into effect on New Year’s Day, as long as MPs approve the plans, meaning companies will start reporting their pay ratios in 2020.

Matthew Fell, chief UK policy director of the Confederation of British Industry, said: “The CBI is clear that high pay is only ever justified by outstanding performance. High pay for mediocre or poor performance is unacceptable.”