UK’s new executive pay gap regulations come into force this month UK’s new executive pay gap regulations come into force this month

UK’s new executive pay gap regulations come into force this month
08 Jan 2019

As of this month, the UK’s largest listed firms will be forced to disclose the pay difference between their top executives and wider personnel base under new executive pay gap regulations.

 The new rules apply to all public companies with more than 250 employees and mean that by 2020, they will be obliged to publish their chief executive’s and wider employee pay rates for 2019.

 Business Secretary Greg Clark said the regulations would help to increase transparency and boost accountability at the highest level, thereby “giving workers a stronger dialogue and voice in the boardroom, and ensuring businesses are accountable for their executive pay”.

In August, it was revealed that the median salary of FTSE 100 chief executives rose by 11% in 2017, while the wages of ordinary workers stagnated. Average employee renumeration stood at £23,474 (US$29,767), while the median for senior leaders topped £3.9 million (US$4.95 million).

In addition to revealing their corporate pay structures, the UK’s biggest businesses will also be required to disclose how their directors take employee interests into account when making board-level decisions. They will also need to clarify their corporate governance arrangements, according to Compelo.

Clark explained the rationale: “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.”

Elsewhere, The Independent reported that the High Pay Centre think tank and the Chartered Institute of Personnel and Development were marking Friday 4 January by designating it as 'Fat Cat Day', the moment at which the earnings of a typical FTSE 100 chief executive overtook the average annual UK salary.

Emma Woollacott

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

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As of this month, the UK’s largest listed firms will be forced to disclose the pay difference between their top executives and wider personnel base under new executive pay gap regulations.

 The new rules apply to all public companies with more than 250 employees and mean that by 2020, they will be obliged to publish their chief executive’s and wider employee pay rates for 2019.

 Business Secretary Greg Clark said the regulations would help to increase transparency and boost accountability at the highest level, thereby “giving workers a stronger dialogue and voice in the boardroom, and ensuring businesses are accountable for their executive pay”.

In August, it was revealed that the median salary of FTSE 100 chief executives rose by 11% in 2017, while the wages of ordinary workers stagnated. Average employee renumeration stood at £23,474 (US$29,767), while the median for senior leaders topped £3.9 million (US$4.95 million).

In addition to revealing their corporate pay structures, the UK’s biggest businesses will also be required to disclose how their directors take employee interests into account when making board-level decisions. They will also need to clarify their corporate governance arrangements, according to Compelo.

Clark explained the rationale: “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.”

Elsewhere, The Independent reported that the High Pay Centre think tank and the Chartered Institute of Personnel and Development were marking Friday 4 January by designating it as 'Fat Cat Day', the moment at which the earnings of a typical FTSE 100 chief executive overtook the average annual UK salary.

Emma Woollacott

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

OTHER STORIES THAT MAY INTEREST YOU

UK companies told to justify their executive pay gap

All UK workers entitled to itemised payslips as of April

HMRC personnel recognised in UK's New Year's Honours list

 

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