New pay ratio regulations introduced by the government which came into force at the beginning of January mean that companies are now required to justify the pay of top bosses.

The regulations, which apply to UK listed companies with over 250 employees, also require companies to disclose the gap between top bosses and the median, lower quartile and upper quartile pay of their UK employees. This reporting requirement will come into effect in 2020, thereby covering CEO and employee pay awarded in 2019.

In addition to the reporting of pay ratios, the new laws also require all large companies 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.

These new regulations are long overdue. According to a new report by the High Pay Centre and the Chartered Institute of Personnel and Development (CIPD), the UK’s top bosses make more in a matter of days than a typical full-time worker will earn in the entire year.

As a result, the average FTSE 100 CEO earning an average pay packet of £3.9 million only needed to work until 1pm on Friday 4 January this year in order to earn the same amount as an average full-time worker on a gross annual salary of just under £30,000.

The £3.9 million figure, which was calculated by the CIPD and the High Pay Centre, marks an 11 per cent increase on the £3.5 million figure that they reported the previous year. This pay increase means that FTSE 100 CEOs, working an average 12-hour day, will only need to work for 29 hours in 2019 to earn the average worker’s annual salary, two hours less than in 2018.

The report, entitled “RemCo reform: governing successful organisations that benefit everyone”, also identifies the shortcomings of remuneration committees charged with setting executive pay and calls for them to be significantly reformed.

Emma Game of Thompsons Solicitors comments: “Obtaining this data is another important way forward in trying to address equality in the workplace. The pay of senior executives has been a contentious issue for some time with clear inequality between senior executives and their workforce. It is an important first step though we suspect much more will be needed.

The High Pay Centre report can be read in full on their website.