New law means companies will soon have to reveal pay gap between management and average staff

New law means companies will soon have to reveal pay gap between management and average staff

It's one of those thoughts we all have a work, but never publicly ask: how much does my boss earn?

You see them arriving in their nice car everyday, and hear that they've got a flat in the city and a home in the countryside, so you know that they're on big bucks, but exactly how much? You want to know, but you don't at the same time, as it will just make you depressed about how measly your salary is in comparison, filling you with resentment and jealousy.

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According to analysis by High Pay Centre earlier this year, the Fat Cats of some of the biggest companies in the UK, earned more by lunchtime than the average worker would all year. It's pretty depressing stuff and reflects how unequally pay is distributed across the UK, but there is now some good news when it comes to the pay gap.

Yesterday, the UK government announced a new proposal which will expose the difference in pay between bosses and employees in order to create more transparency in the workplace.

The new corporate governance laws were announced by Business Secretary Greg Clark and mean that companies will have to publish the gap in salary between their highest and lowest paid employees. It's estimated that around 900 publicly listed companies will be forced into revealing the pay ratio between bosses and workers when the laws come into effect as of June 2018.

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The government will also be introducing new laws that require companies of a significant size to publicly explain how their directors take employees' and shareholders' interests into account when making important issues regarding the direction of the company in general. All large companies will also be asked to make their responsible business arrangements available to the public.

In a move to make sure that employees' interests are better represented at board level, the new laws will also have conditions for listed companies to employ a non-executive director who will represent employees, create an employee advisory council or nominate someone to become a director from the workforce.

Greg Clark believes that the reforms "will build on our strong reputation and ensure our largest companies are more transparent and accountable to their employees and shareholders."

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The new laws have been welcomed by several establishments, with Stefan Stern, the director of the High Pay Centre, which estimated that a chief executive earns 129 times more than the average employee, welcoming the announcement of the new laws, saying it was a "step in the right direction".

"We want investors and boards to ‎have a more constructive and more thoughtful conversation on executive pay, and this sort of public disclosure should help," said Stern.

UK Prime Minister Theresa May has previously pledged to improve the pay transparency at major companies, and has said that she wants to give employees a voice in the boardroom. Hopefully with the implementation of these new laws, we'll see employees getting a fairer share of the wealth that they help to generate, and the workplace will become a better place in general.