BIG firms will have to justify their chief executives' salaries and reveal the gap to their average worker, under new laws to be laid in Parliament on Monday.

For the first time, UK listed companies with more than 250 employees will have to disclose and explain every year the so-called "pay ratios" in their organisation.

The move follows concerns that some chief executives have been receiving salaries that are out of step with company performance, say ministers.

Business Secretary Greg Clark said: "One of Britain's biggest assets in competing in the global economy is our deserved reputation for being a dependable and confident place in which to do business.

"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.

"Requiring large companies to publish their pay gaps will build on that reputation by improving transparency and boosting accountability at the highest levels, while helping build a fairer economy that works for everyone."

The new regulations also require listed companies to show what effect an increase in share prices will have on executive pay.

Government minister Lord Duncan said: "It only takes poor behaviour from a small number of companies to damage the public's trust in big business.

"Improving transparency and accountability in this way, plus other initiatives such as giving employees a voice in the boardroom, will help create a more equal and fair society while ensuring that the UK remains a world-leading place to invest and do business."

Subject to Parliamentary approval, the regulations will come into effect from January 2019, meaning that companies will start reporting their pay ratios in 2020.

The move comes after years of shareholder and public outrage over bumper chief executive pay at firms such as Persimmon, WPP and BP.

Shell, Lloyds, Astrazeneca, Playtech, William Hill, GVC, and Inmarsat are among the plethora of firms to be hit by pay revolts at AGMs this year.

Just last week, house-builder Persimmon admitted a raft of failures that led to an embarrassing shareholder rebellion over pay as MPs slammed an "egregious" pay deal for top bosses worth more than £100 million.

Marion Sears, remuneration committee chairwoman at Persimmon, admitted that she did not know the average worker's pay at the firm.

Chris Cummings, chief executive of the Investment Association, said: "The UK has a global reputation as a leader in corporate governance and we welcome today's package of reforms as they focus on the long-term interest of all company stakeholders, including shareholders and employees.

"Investors are demanding greater director accountability and transparency on executive remuneration.

"Pay ratios will shine a spotlight on what executives are being paid compared with their workforce, and investors will expect boards to articulate why the ratio is right for the company and how directors are fulfilling their duties."

TUC general secretary Frances O'Grady said: "Publishing and justifying pay ratios is a first step, but more is needed.

"Fat-cat bosses are masters of self-justification and shrugging off public outcry. New rules are needed to make sure they change.

"We need guaranteed places for worker representatives on boardroom pay committees. That would bring a bit of common sense and fairness to decision-making when boardroom pay packets are approved."

"The Government should put an end to phoney incentive schemes that reward executives above and beyond the actual results they get."