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Employment in Ghana

Ghana has a strong and vibrant labour movement that is very effective in articulating the demands of its workers. The various sectors of the economy are represented by sector labour unions that are affiliated to the national umbrella labour union called the Trades Union Congress (TUC). The main sector of employment is agriculture, which provides employment for more than half the workforce in Ghana.

Key points on employment in Ghana

The main legislation governing employment relations in Ghana is the Labour Act 2003.

  1. Contracts

    Ghana employment law requires that any workers employed for six months or more must be provided with a written contract of employment.

    The employment contract must include information about the worker and employer, date of appointment, job title, wage rate and payment interval, work hours, overtime payment, annual leave, conditions relating to incapacity for work due to injury or sickness, length of termination notice required by the worker and employer and details of social security or pension scheme.

    The written statement of particulars (containing main terms and conditions of employment) should be provided to a worker within two months of the commencement of employment. The contract must be signed by both parties and dated.

    Fixed-term contract workers

    While the Labour Act allows hiring fixed term contract workers for tasks of permanent nature, it does not specifically refer to any legal regime for the use of fixed-term contracts. Hence, there is no mention of the maximum duration (including renewals) of the fixed term contracts.

    Casual and temporary workers

    A temporary worker is defined as a worker who is employed for a continuous period of at least one month and is not a permanent worker or employed for a work that is seasonal in character; while casual worker is a worker engaged on a work which is seasonal or intermittent and not for a continuous period of more than 6 months and whose remuneration is calculated on a daily basis. A temporary worker who is employed by the same employer for a continuous period of six months and more is treated as a permanent worker.

    While casuals are not required to be provided with a contract of employment for a casual worker may not be written; they still have the right to minimum wage for each working day, overtime and medical facilities.

    Temporary workers are entitled to the Labour Act’s minima in respect of minimum wage, hours of work, rest periods, paid public holidays, night work and sick leave, irrespective of whatever terms agreed by the parties.

    The Constitution also guarantees the right to freedom of association, which it defines to include the right of employees to form or join trade unions or other national or international associations, for the protection of their interests.

    Collective bargaining agreements

    Employees are free to join trade unions of their choice.

    A collective agreement relates to terms and conditions of employment of workers and may be concluded between the trade unions on one hand and representative of one or more employers or employers’ organisations on the other hand. The representatives of the employees may include the following provisions in their collective:

    • The class or category of workers to which it relates
    • The conditions of work, including the hours of work, rest period, meal breaks, annual leave, occupational health and safety measures
    • The remuneration and the method of calculating the remuneration of workers
    • The period of probation and conditions of probation
    • The period of notice of termination of employment, transfer and discipline
    • The procedures for the avoidance and settlement of disputes arising out of the interpretation, application and administration of the agreement
    • The principle of matching remuneration with productivity.

    A concluded agreement between the parties shall be in writing and signed by a duly authorised member of the committee representing each party. Two copies of the agreement shall be filed with the Labour Commission and the Chief Labour Officer.

  2. Probation Periods

    The Labour Act does not specifically provide for a maximum duration of probation period.  Instead, it refers to a “reasonable duration determined in advance”. Generally, probationary periods and conditions of probation are provided in collective agreements. Where, as a condition for the engagement of an employee, a contract of employment requires probation, the employment contract has to specify the duration of the probation for the employee.

  3. Termination Procedures

    An employer may terminate a contract of employment on the on the following grounds:

    • Incompetence or lack of qualification in relation to the work for which the worker is employed
    • Proven misconduct of the worker
    • Redundancy
    • Legal restriction imposed on the worker prohibiting the worker from performing the work for which he or she is employed

    Notice period

    The length of notice period that must be provided by the terminating party varies according to the length of contract:

    • Workers employed on a weekly contract may be given a week’s (7-day) notice.
    • Workers employed on a contract of less than 3 year duration may be given a 2 weeks’ notice.
    • Workers employed on a contract of longer duration (3 years or more) may be given one month notice.

    Severance payment

    The terminating party (employer or employee) is required to pay out the gross wages for the notice period or part remaining thereof in lieu of notice if a contract is terminated without fulfilling the statutory notice period. In cases where both parties have signed an “at will” clause in the contract, employment may be terminated by any party at the end of working day without any notice.  Termination notice should be in written form and includes the day on which notice was given.

    Other than redundancy pay (for economic dismissals), workers are also entitled to following payments on termination of employment: any remuneration earned by the worker before contract termination; any deferred pay due to the worker before contract termination; any compensation due to the worker in respect of sickness or accident; and repatriation expenses in the event of contract termination for foreign contracts. The employer is required to make all these payments within the duration of notice period. In case no notice is required, payment must be made the next working day after termination.

    However, individuals dismissed due to non-economic reasons (e.g. misconduct) are not entitled to severance payment on termination.

    Unfair dismissal

    A contract termination is deemed unfair if the only reason for termination is:

    • That the worker has joined or intends to join or has ceased to be a member of a trade union or intends to take part in the activities of a trade union
    • That the worker seeks office as, or is acting or has acted in the capacity of a worker representative
    • That the worker has filed a complaint or participated in proceedings against the employer involving alleged violation of this Act or any other enactment
    • The worker’s gender, race, colour, ethnicity, origin, religion, creed, social, political or economic status has been discriminated against
    • In the case of a woman worker, due to the pregnancy of the worker or the absence of the worker from work during maternity leave
    • In the case of a worker with a disability, due to the worker’s disability
    • That the worker is temporarily ill or injured and this is certified by a recognised medical practitioner;
    • That the worker does not possess the current level of qualification required in relation to the work for which the worker was employed which differs from the level of qualification required at the commencement of his or her employment
    • That the worker refused or indicated an intention to refuse to do any work normally done by a worker who at the time was taking part in a lawful strike unless the work is necessary for the maintenance of plant and equipment.

    An employment contract is also deemed to have been terminated unfairly if the worker terminates employment contract, with or without notice, because of the ill treatment of the worker by the employer; and failure on the part of employer to take action on repeated complaints of sexual harassment of the worker and lastly, if the employer fails to prove that the reason for termination is not fair or the that the termination was made in accordance with a fair procedure of the Labour Act.

    In the event the worker feels that a dismissal was made unfairly, he or she may lay a complaint at the National Labour Commission. If it is established that the employment was unfairly terminated, the Commission may order the employer to re-instate the worker from the date of the termination of the employment and/or to pay compensation.

  4. Statutory Leave

    Working Hours

    The maximum number of working days in Ghana is five. All workers, except domestic workers in private homes and task-based workers, are entitled to forty-eight consecutive hours (2 days) of rest per week. The weekly rest days are usually Saturday and Sunday. Weekly rest period is independent of public holidays.

    Apart from weekly rest day, workers are also granted a daily continuous rest of at least twelve hours duration between two consecutive working days. The daily rest in an undertaking operating on a seasonal basis may be of less than ten hours but of not more than twelve hours’ duration over a period of at least sixty consecutive days in the calendar year.

    Annual Leave

    A worker is entitled to at least 15 working days fully paid annual leave, after completion of 12 months of continuous service.

    On termination of employment contract, the worker is entitled to annual leave in proportion to the period of service in the calendar year (except in the case of termination without notice by the employer).

     

    Medical Leave

    While the Labour Act does not specifically provide for a statutory minimum period for medical leave, employers are still required to pay for medical expenses caused by occupational injury.

    Maternity Leave

    Female workers are entitled to 12 weeks (84 days) of maternity leave with full pay. The maternity leave can be extended by two additional (2) weeks in case of caesarean delivery/abnormal birth or twin (or more) births. Extended leave may also be granted in case of illness due to pregnancy or confinement, certified by the medical practitioner. There is no maximum limit of extended leave stipulated in the law.

  5. Pensions and Benefits

    Under the National Pensions Act, 2008 (Act 766) (“NPA”), there is a contributory three-tier pension scheme as follows:

    • A mandatory basic national social security scheme, (‘Tier 1’),
    • A mandatory fully funded and privately managed occupational pension scheme (‘Tier 2’), and
    • A voluntary fully funded and privately managed provident fund and personal pension scheme (‘Tier 3’).

    Every employer is required by law to register with Social Security and National Insurance Trust (SSNIT) and make social security contributions in respect of its employees.

    With respect to Tiers 1 and 2, employers are obliged to deduct the employee’s contribution of 5.5% from the salary of all employees immediately at the end of the month. The employer’s contribution equals 13% of each employee’s salary for each month.

    Employers remit 13.5% out of the 18.5% to the Social Security and National Insurance Trust. The remaining 5% is remitted by the employers to the trustees appointed by the employers to manage the employees’ occupational pension schemes. In other words, First-tier contributions are remitted to the SSNIT, whereas second-tier contributions are remitted to an approved trustee.

    In addition to the mandatory 18.5% rate stipulated by the NPA, either the employer or the employee or both may contribute up to 16.5% toward a provident fund scheme for the benefit of the employees.

    Self-employed persons may contribute up to 35% of their monthly income toward their social security.

Outsourcing Employment Through a GEO Employer of Record Service

Compliance with local employment requirements is just one of the issues foreign companies face when employing staff in Ghana. For companies which intend to employ their staff directly through their incorporated Ghanaian entity, professional legal advice is recommended. Shield GEO provides an alternative path for companies to outsource the employment of their staff in Ghana.

As a Global Employer Organization (GEO), Shield GEO acts as the Employer of Record and ensures the employment is compliant with host country regulations regarding employment. In addition Shield GEO will handle payroll processing, tax and immigration. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Ghana.

The Shield GEO solution is an attractive alternative where

– the company is looking to employ staff quickly

– the company doesn’t have an appropriately incorporated entity in Ghana

– the company wants to work within a defined budget

– the company wants to limit its initial commitment in Ghana

– the company needs help with tax, employment, immigration and payroll compliance in Ghana

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