Employment Law in Ghana: Key Obligations for Employers

Ghana's Labour Act 2003 (Act 651) is the primary legislation governing employment relationships in Ghana. It covers all employees in Ghana, whether employed by Ghanaian or foreign companies. For businesses expanding into Ghana or employing Ghanaian workers, understanding the baseline obligations is essential to avoid disputes, penalties and reputational damage.

Overview of the Labour Act 651

The Labour Act 651 of 2003 consolidates and harmonises Ghana's employment law. It establishes minimum standards for employment contracts, working conditions, leave entitlements, termination and dispute resolution. It is supplemented by the National Labour Commission Act and sector-specific regulations.

The Act applies to all workers and employers in Ghana, including foreign employers with operations in the country. Employment contracts that attempt to exclude or reduce statutory rights are unenforceable to the extent they fall below the minimum standards.

Employment contracts and terms

Every employee must have a written statement of employment terms within two months of commencing employment. The statement must include:

• The names of the employer and employee
• The date employment commenced
• The nature of the work and workplace
• The rate of remuneration and method of payment
• Hours of work and any overtime arrangements
• Leave entitlements
• Notice period requirements
• Any probationary period

Oral contracts are recognised but create significant evidential difficulties. Written contracts provide clear protection for both parties and are strongly recommended. Employment contracts governed by Ghanaian law must comply with the Labour Act regardless of any choice of law clause.

Working hours and leave entitlements

Standard working hours under the Labour Act are eight hours per day and 40 hours per week. Overtime work must be compensated at a premium rate - at least 150% of the normal hourly rate for weekday overtime and higher rates for weekends and public holidays.

• Annual leave: minimum 15 working days per year after 12 months' continuous employment
• Sick leave: employees are entitled to paid sick leave upon production of a medical certificate
• Maternity leave: 12 weeks' maternity leave at full pay, extendable by two weeks in cases of multiple births or complications
• Paternity leave: entitlement exists under some sectoral agreements - check applicable collective agreements
• Public holidays: 13 gazetted public holidays per year, fully paid

Termination and redundancy

The Labour Act provides important protections for workers against unfair dismissal. Employers must have a valid reason for termination - relating to conduct, capability or genuine redundancy - and must follow a fair process.

Notice requirements vary by category of worker and length of service:

• Monthly paid workers: one month's notice or payment in lieu
• Weekly paid workers: two weeks' notice or payment in lieu
• Daily paid workers: one week's notice or payment in lieu

In cases of redundancy, employers must consult with trade unions or employee representatives, give priority to re-deployment, and pay severance of at least two weeks' pay for each year of service. The National Labour Commission provides dispute resolution services for employment disputes.

Practical compliance checklist for Ghana employers

Immediate actions to take when employing in Ghana:

• Register the business with the Ghana Revenue Authority and Social Security and National Insurance Trust (SSNIT)
• Ensure all employees have written contracts meeting Labour Act minimums
• Set up payroll to deduct and remit income tax (PAYE) and SSNIT contributions (13.5% employer, 5.5% employee)
• Implement compliant leave tracking for annual leave, sick leave and maternity leave
• Establish a documented disciplinary and grievance procedure
• Understand any applicable collective bargaining agreements in your sector

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