Plans announced by the Government earlier this month are set to require firms employing 250 people or more to publish details of the difference in pay between the chief executive and the average worker.
Firms will also be required to explain the reasons behind the pay gap.
The plans were announced after a spate of high-profile shareholder protests over the high level of executive pay.
Business Secretary, Greg Clark, said: “Most of the UK’s largest companies get their business practices right, but we understand the anger of workers and shareholders when bosses’ pay is out of step with company performance.”
Matthew Fell from the Confederation of British Industry, said: “This legislation can help to develop a better dialogue between boards and employees about the goals and aspirations of their business, and how pay is determined to achieve this shared vision.”
The new requirements come in addition to compulsory reporting of the gender pay gap, under which large companies must publish details of the difference in pay between the average male and the average female employee.
It is expected that, subject to Parliamentary approval, the new regulations will come into effect from 2020.