The pay ratio regulations will apply to all large UK listed companies with over 250 employees.

The first statutory disclosures will be provided from the start of 2020 to justify the pay for top bosses and explain the gap between that and their average workers’ salaries.

Companies will have to disclose annually the ratio of their CEO’s pay to the median, lower quartile and upper quartile pay of their UK employees.

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.

Business Secretary Greg Clark said: “We do 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 increase transparency and boost accountability at the highest level – giving workers a stronger dialogue and voice in the boardroom and ensuring businesses are accountable for their executive pay.”

Alongside the pay ratio reporting will be a new statutory duty on companies to set out the impact of share price growth on executive pay outcomes.

This will provide greater clarity for shareholders about the impact that significant share price growth can have on executive pay outcomes and whether discretion has been exercised before pay awards are finalised.