Pay ratio regulations force construction companies to be more transparent


Pay ratio regulations are set to come into force for large UK construction companies with over 250 employees, as businesses must disclose pay for top bosses

New pay ratio regulations mean that, for the first time, the UK’s largest construction companies will have to disclose and explain every year their top bosses pay and the gap between that and their average worker.

The pay ratio regulations will make it a statutory requirement for UK listed companies with more than 250 employees to disclose annually the ratio of their CEO’s pay to the median, lower quartile and upper quartile pay of their UK employees.

Additionally, the new laws also require all large businesses to report on how their directors take employee and other stakeholder interests into account and require large private companies to report on their corporate governance arrangements.

The pay ratio regulations reforms are part of the government’s bid to upgrade our leading corporate governance and business environment. Reforms follow support and calls from investors and shareholders for organisations to become more transparent about how boardroom pay aligns with overall company pay.

The pay ratios regulations will hold Britain’s largest businesses to account for excessive salaries, while recent changes to the corporate governance code give employees a greater voice in the boardroom.

Business Secretary Greg Clark said: “Britain has a well-deserved reputation as one of the most dependable and best places in the world to work, invest and do business and the vast majority of our biggest companies act responsibly, with good business practices.

“We do however understand the frustration of workers and shareholders when executive pay is out of step with performance and their concerns are not heard.

“The regulations coming into force today will build on our reputation by increasing transparency and boosting accountability at the highest level – giving workers a stronger dialogue and voice in the boardroom and ensuring businesses are accountable for their executive pay.”

The corporate governance upgrades introduced by the government form an essential part of the UK’s modern Industrial Strategy – a long term plan to build a Britain fit for the future through a stronger, fairer economy.

Construction companies will begin reporting on pay ratio in 2020 (covering CEO and employee pay awarded in 2019).


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