Ghana’s employment law and policy may be traced to various sources. Essentially, the employment regime has been influenced by the Constitution of Ghana,2 legislation which, among others, has established the institutional framework for addressing labour concerns, the common law and obligations under international organisations. Foremost of these is Ghana’s Constitution which, in Chapter 5, provides for the fundamental human rights and freedoms. It confers on every person, among others, economic rights, including the right to work under satisfactory, safe and healthy conditions, the right to receive equal pay for equal work, and the right to form or join a trade union of his or her choice for the promotion and protection of his or her economic rights and social interests.3
The Labour Act of Ghana4 consolidates and updates the various pieces of former legislation and introduces provisions to reflect ratified International Labour Organization Conventions to which Ghana is a signatory. The Labour Act covers all employers and employees except those in strategic positions such as the armed forces, police service, prisons service and the security intelligence agencies. Major provisions of the Labour Act include:
- a establishment of public and private employment centres;
- b protection of the employment relationship;
- c general conditions of employment;
- d employment of persons with disabilities;
- e employment of young persons;
- f employment of women;
- g fair and unfair termination of employment;
- h protection of remuneration;
- i temporary and casual employees;
- j trade unions;
- k employers’ organisations and collective agreements;
- l strikes;
- m establishment of a National Tripartite Committee;
- n forced labour;
- o occupational health and safety;
- p labour inspection; and
- q the establishment of the National Labour Commission.
The supervisory Ministry of State that is responsible for labour matters is the Ministry of Employment and Labour Relations. This executive body is responsible for the formulation and implementation of labour laws, policies, regulations and conventions of industrial relations, as well as the monitoring and evaluation of such policies and programmes.
The law provides for the establishment of the Commission on Human Rights and Administrative Justice5 to investigate complaints of violations of fundamental human rights and freedoms, injustice and corruption, abuse of power and unfair treatment of persons by public officers in the exercise of their duties, with the power to seek remedies in respect of such acts or omissions.
To address labour disputes, Act 651 established the National Labour Commission6 with a mandate to settle industrial disputes, investigate unfair labour practices, prevent labour disputes and promote cooperation between workers and management. In addition, the Commission helps to facilitate mediation and conciliation between employees and employers in conflict situations. The National Labour Commission does not have enforcement powers but requires the High Court to enforce its decisions.
To facilitate the speedy resolution of labour and industrial disputes, the Labour and Industrial Division of the High Court was established in response to previous recommendations to have a separate Court dealing with labour and industrial disputes.
The employment of foreign nationals to work and reside in Ghana is regulated by the Immigration Act, 2000 (Act 573).
II YEAR IN REVIEW
The past year has witnessed widespread discontent at the rate of improvement in living standards, and hikes in taxes, utilities and fuel prices, which have made economic conditions difficult for the ordinary Ghanaian. A new tax legislation came into force introducing new taxes into the economy. These included an increase in the rate of withholding tax, among others, compounding the harsh economic conditions. The year also witnessed agitations in the labour sectors, including the power sector. These were mostly over concerns of job losses, poor working conditions and management inefficiencies within major state agencies.
Notably, the agitations were in the form of protests and strikes over conditions of service or management of the agencies. The Electricity Company of Ghana had its workers agitating, in the form of a strike, over the government decision to cede part of the management of the company to private concessionaires, which would lead to massive job lay-offs.7
Similar agitations were noted in the Volta River Authority and the Ghana Gas Company, as well as the Tema Oil Refinery. In the case of the Volta River Authority, workers demanded their CEO be dismissed over certain management decisions, including the takeover of some power plants.
The further reduction in the world market price of crude oil led to further lay-offs globally, which consequently affected workers in the oil and gas sector in Ghana.
III SIGNIFICANT CASES
Judicial Service Staff Association v. Attorney General and Others delivered by the Supreme Court on 23 June 2016 considered discrimination and unconstitutional actions of the defendant in relation to pension schemes.
The plaintiff instituted an action as a corporate citizen of Ghana, pursuant to Article 2(1) of the 1992 Constitution of Ghana for the benefit of its members, whose pension rights guaranteed by the Constitution were allegedly being infringed upon by the defendants.
The key reliefs sought by the plaintiffs in the case before the Court hinged on the failure of the judicial service to put them on a CAP 30 pension scheme as bench members in the judiciary was discrimination as CAP 30 scheme was more beneficial to them than the compulsory contributory Social Security and National Insurance Trust (SSNIT) pension scheme.
The relevant issues being considered here were:
- a whether or not the constitutional requirement in Article 127(4) of the 1992 Constitution that the ‘gratuities and pensions payable to or in respect of persons serving in the judiciary shall be charged on the Consolidated Fund’ imposes a duty to place the plaintiff’s members on the CAP 30 pension scheme and not the SSNIT pension scheme; and
- b whether or not the expression ‘all persons serving in the judiciary’ appearing in Article 127(4) of the 1992 Constitution applies only to the justices, judges and magistrates to the exclusion of all other judicial service employees, including the non-bench judicial officers.
On the question of discrimination, the court was unanimous in concluding that the payment of CAP 30 pension benefits to Supreme Court justices and judges and magistrates of the lower bench to the exclusion of members of the plaintiff’s association did not amount to discrimination within Article 17(2) of the 1992 Constitution.
The Court arrived at its decision by considering the meaning of discrimination.8 According to the majority, Article 17(2) did not mean that every person within the Ghanaian jurisdiction has or must have exactly the same rights as all other persons in the jurisdiction, as this will be impracticable. The Court made a distinction between legitimate and illegitimate discrimination and concluded that while the former form of discrimination is allowed in the Constitution, the latter is wrong and unconstitutional.
The placement of directors on CAP 30 did not mean that they were put on those conditions by reason of their gender, race, place of origin or other reasons contained in Article 17, so as to be bring their employment under those conditions in breach of Article 17(2) of the Constitution. Matters of employment are purely contractual. The difference in conditions itself does not necessarily give rise to discrimination.
On the question of whether or not the expression ‘all persons serving in the judiciary’ include bench and non-bench persons, the majority concluded that the non-bench persons in the judiciary services were rightly placed on the SSNIT pension scheme.
The dissenting opinion concluded otherwise, that ‘judiciary’ as used in the constitution in Article 127(4) applied to judges, magistrates and to all other judicial service employees, including the non-bench judicial officers. Utilising a broad and purposive approach to interpreting the meaning of judiciary, the dissenting judge concluded that the plaintiffs were within the provisions of Article 127(4) of the Constitution and, therefore, any gratuities or pensions payable to them must be charged to the consolidated fund and be payable to them therefrom, not from the compulsory contributory SSNIT pension scheme.
IV BASICS OF ENTERING AN EMPLOYMENT RELATIONSHIP
i Employment relationships
Although an employment relationship may exist without a formal contract of employment, in practice, most employment relationships in Ghana are governed by some form of agreement. The law requires that an employment contract should be provided in cases where the employment is for a minimum period of six months.9 Generally, an employment contract must state the rights and obligations of the parties to the contract.10 Specifically, the law provides the following minimum standards:
- a name of employer;
- b name of employee;
- c date of first appointment;
- d title;
- e pay;
- f hours of work;
- g holiday periods, etc.;
- h conditions relating to incapacity to work due to sickness or injury;
- i details of social security pension scheme;
- j notice of termination of contract;
- k disciplinary rules;
- l grievance procedures; and
- m overtime conditions.
The Labour Act sets the minimum standards required to govern employment relations. However, employment contracts and collective bargaining agreements may provide for better conditions.
Fixed-term contracts are permissible under Ghanaian law.
Ghanaian law requires that within a period of two months after the commencement of employment, the employer must furnish the worker with a written statement of the particulars of the main terms of the contract.
In practice, the parties may amend a contract by supplementing the new terms and incorporating the same by either an addendum or executing an entirely new contract.
ii Probationary periods
In practice, probationary periods or qualifying periods are permitted by law for new employees to evaluate the performance of the new employee prior to confirming the full engagement. This period must be reasonable and determined in advance. Termination of employment relations during probationary periods must follow the notice periods detailed in the law.11
iii Establishing a presence
A foreign company registered abroad may engage an independent contractor for business in Ghana. Additionally, a foreign company may hire employees without being officially registered to carry out business in Ghana. A foreign entity registered outside Ghana that desires to have an established place of business12 in Ghana may be required to register an external company under Ghana’s Companies Act.13 The company that has a permanent establishment may be liable to pay tax on profits under the tax regime in Ghana.14 However, where applicable, these payments will be subject to the double taxation agreement between Ghana and the country of origin of the foreign company. The company may also be required to withhold taxes on payments made, including from rental of properties. The external company is required to annually file its audited accounts and returns to the company’s registry.
Where the foreign company with a permanent establishment employs foreign workers who spend a considerable amount of time in Ghana, it may be liable to pay tax under the tax regime of the country, as the company may be deemed to be a resident for tax purposes.15 A foreign employer will be required to deduct personal income tax of employees at source and is required to report, withhold and pay the same to the tax authorities.
The law requires employers to make pension contributions on behalf of their employees, both foreign and Ghanaian.16 Employees are expected to make a contribution of 5.5 per cent of their basic salary to the scheme on a monthly basis. The employer makes a contribution of 13 per cent on a monthly basis to the authorities. Employees may elect to make additional voluntary contributions.
V RESTRICTIVE COVENANTS
The common law regulates restrictive covenants in employment contracts in Ghana.
An employment contract may contain clauses prohibiting departing employees from soliciting former employees, clients and customers and prohibiting them from competing for a defined period following the termination of the contract of employment.
Generally, where an employee contracts with his or her employer that he or she will not compete upon leaving the employment, such a restraint will be upheld only where it is reasonably necessary to protect a proprietary right of the employer in the nature of trade connections or trade secrets. The employer is not entitled to protect itself against mere competition from its former employees.
Thus, if the employer can show that its former employee has acquired knowledge of trade secrets, such as a secret process or method of manufacture, the employer will be entitled to impose such a restraint on the employee to afford the employer a reasonable protection of its interest. Further, where the nature of the employment is such that the employee may acquire the trust of, or influence over, customers, such that the employee may be able to take the employer’s business with him or her if he or she sets up in competition, then the employer would be entitled to impose the restraint.17
i Working time
Generally, no worker may work more than 40 ordinary hours a week or eight hours in a day except as otherwise expressly provided for in the labour law.
Employees are generally entitled to receive overtime payments for additional hours of work that exceed the hours of work agreed upon in their contract. An employee is not required to undertake overtime work unless the contract has a fixed rate of paid overtime work.18 Furthermore, an employee is not obligated to undertake overtime work except where the company requires this overtime in order to be viable or there are emergencies that require such overtime in order to avoid threats to life and property.
However, an employee may be required to work beyond the fixed hours of work without overtime pay in the event of an accident threatening human life or the very existence of the company.
VII FOREIGN WORKERS
The employment of foreign nationals in Ghana is regulated by the Immigration Act.19 The law sets the parameters for the admission, residence, employment and removal of foreign nationals in Ghana. It is not a mandatory requirement for an employer to keep a register of foreign workers but, in practice, this is necessary as the immigration authorities, occasionally, on visits, inquire about such information in relation to foreign workers in an organisation. Additionally, companies are required to file an annual return of foreign workers in their employment at the beginning of each year to the immigration authorities.20
Generally, there is no prescribed limit by law on the number of foreign workers that a company may have, but certain legislation seeks to regulate the number of foreign workers by prescribing the ratio of foreign workers to Ghanaians in the entity. For example, an entity with foreign ownership (whether partly or wholly) engaged in trading activities is mandated to employ 20 skilled Ghanaian workers in the enterprise.21 A contractor or subcontractor in the petroleum sector is required to engage Ghanaians in middle and junior level positions as defined in the law.22
Generally, the law does not specifically restrict the length of a foreign worker’s assignment. However, a particular sector’s regulations may provide for a succession plan to localise certain positions which invariably restrict the length of time that the foreign employee will be allowed to work in Ghana.23
Ghana law requires that any foreign worker must obtain a work and residence permit to be able to carry out work activities in Ghana. In the acquisition of a work authorisation, various industries may have specific requirements, which the employer must satisfy in order to employ a foreign national. Specifically, strict labour market testing is required where an employer in the oil and gas sector intends to employ foreign workers.
The company is required to withhold and pay employees’ personal income taxes to the revenue authorities. The law provides that an individual who is not a citizen of Ghana is a resident for tax purposes if he or she resides in Ghana for a period exceeding 186 days in a 12-month period that commences or ends during the year of assessment. Additionally, the employer is required to make social security or pension contributions on behalf of a foreign employee. This contribution may be claimed by the employee upon completion of the assignment in the country.
It is instructive to note that no distinction is made between a foreign employee and Ghanaian employee. As such, the foreign worker has the same protection under Ghana labour laws as any Ghanaian worker, and each worker benefits from all of the benefits and protections offered by the labour laws of Ghana.
VIII GLOBAL POLICIES
Ghana labour law does not require employers to have internal discipline rules. However, individual employers may provide such rules for its employees in order to regulate the work environment. Employers do not require approval or an agreement from its workers when providing internal discipline rules unless such rules materially affect existing contract terms. Furthermore, employers are not required to file such rules or obtain prior approval before introducing the rules.
There is no requirement to provide written rules on discrimination, sexual harassment or corruption, as these have been adequately addressed in legislation. The Constitution of Ghana guarantees fundamental freedoms including freedom from discrimination on the grounds of gender, race, colour, ethnic origin, religion, creed or social and economic status. The importance of this provision is reiterated in the Labour Act, which provides protection against discrimination on the grounds of, inter alia, gender, disability or politics. An employee has a legal right to terminate his or her employment on the grounds of sexual harassment.
The rules on discipline in the workplace need not be translated into local language, but it may be prudent for the contents to be explained to workers who may not understand English.
There is no requirement for the rules in the workplace to be signed by employees. Nonetheless, it may be prudent for employees to sign these rules as they serve as notice that employees are aware of the rules.
The company has discretion to decide the mode of transmission of the written rules of the organisation, including posting on notice boards or intranet sites. The company may also decide whether to incorporate these rules into an employment contract.
There is no requirement to translate employment documents into local language or the employee’s native language, but it may be prudent to communicate or explain the contract to an employee in the language or mode that the employee best understands in order for the parties to be ad idem on all terms. A translated version may be provided to the employee for the purpose of understanding, but it must be in English or translated into English to be enforced by the courts. However, certification of the translated document is not required.
X EMPLOYEE REPRESENTATION
The Constitution of Ghana guarantees the freedom of association, which includes the freedom to form or join unions or other associations for the protection of employees’ interests.24 Employees therefore have a right to belong to such trade unions. The law provides that two or more employees employed in the same company may form a trade union.
The constitution of the trade union may provide for the qualifications and election into office of representatives, meeting times, tenure of office of such representatives as well as rules governing suspension from office or membership and procedures for such suspension or removal.
A member of a trade union is protected from victimisation by reason of their membership. A trade union may not discriminate against any member on the grounds of race, religion, gender or disability. A person’s trade union status is protected under the Data Protection Act as special personal data.
Generally, an employer must promote trade union activities in a company rather than restrict the same. The employer is required, subject to the collective bargaining agreement in place, to consult the union on matters relating to disciplinary measures involving employees. An employer is further required, in the event of a redundancy, to consult the trade union on measures to be taken to avert or minimise the termination as well as on measures to mitigate the adverse effects of any terminations, including finding alternative employment.
XI DATA PROTECTION
i Requirements for registration
Ghana passed the Data Protection Act25 in 2012 establishing a Data Protection Commission to protect the privacy of individual and personal data by regulating the processing of personal information and to provide for the process to obtain, hold, use or disclose personal information. Generally, a person processing data is required to take into account the privacy of the individual by applying the principles of accountability, lawfulness of processing, specification of purpose, data security safeguards and data subject participation, among others.
The law mandates everyone who keeps, processes or intends to keep or process another person’s personal data to register with the Data Protection Commission, irrespective of whether the personal data is held in an automated form – that is, a structured set of information forming part of a relevant filing system.26 The company must ensure that the data collected is for a specific purpose, is explicitly defined and lawful and is related to the functions or activity of the person. Any further processing of the data must also be for that specific purpose for collection.
The employer does not require employee consent to process data where it relates to that employee’s employment.
Generally, a company is required to inform the individual of the processing of the individual’s data. The company must also provide the individual with a description of the personal data, the purpose for which the data is to be processed and the recipients to whom the data may be disclosed. The company may therefore restrict access to that information from persons not authorised to receive such information. Furthermore, the company may refuse to disclose personal data where disclosing will result in disclosing data related to another individual whose consent is required for such disclosure. The company may, however, be allowed to disclose the personal data, provided that such disclosure is reasonable in the circumstances, to comply with the request made without the consent of the other individual. However, due regard must be had to the duty of confidentiality owed to the other individual, and efforts must have been made to seek the consent of the other individual.
A company is required to take all necessary security steps to secure the integrity of personal data in their possession or control through the adoption of appropriate, reasonable, technical and organisational measures to prevent the loss of, damage to and unlawful processing of such data. In this regard, the company is required to take reasonable efforts to establish and maintain appropriate safeguards against identified risks and must regularly verify such safeguards.
Where the individual processing the data is not domiciled in Ghana, the company shall ensure that the individual complies with the relevant laws. Any security compromises must be brought to the attention of the Commission and to the individual whose data has been compromised. Steps should be taken by the company to restore the integrity of the system.27
ii Cross-border data transfers
The company who is engaged in cross-border transfers is required to register and disclose the various countries with which they intend to share the data. Joint user agreements or safe harbour registration is not necessary, but the company is required to ensure the protection of personal data and information of employees by implementing reasonable security measures.
iii Sensitive data
Ghana law provides for the protection of special personal data, which may be processed where necessary in the exercise or performance of a right or obligation conferred or imposed by law on an employer. Special personal data has been defined to include information on:
- a race, colour, ethnic or tribal origin;
- b the political opinion on a subject;
- c religious beliefs;
- d physical, medical, mental health or mental condition or DNA of the data subject;
- e sexual orientation;
- f the commission or alleged commission of an offence; or
- g proceedings for an offence committed or alleged to have been committed by the individual, the disposal of such proceedings or the sentence of any court in the proceedings.28
The law prohibits the processing of personal data of a child who is under parental control or data that relates to religious or philosophical beliefs, trade union membership, health, sexual life or criminal behaviour unless the law provides otherwise. These situations include processing for the purpose of or in connection with legal proceedings, in the course of the administration of justice or for medical purposes, and the processing is undertaken by a health professional and pursuant to a duty of confidentiality between a patient and health professional.
iv Background checks
Background checks are generally allowed for the purposes of employment, especially in very sensitive job roles. The checks usually take the form of obtaining a police clearance or following up on references provided by the applicant during the employment process. Some written contracts may contain clauses to the effect that a successful candidate may depend on the results of his or her background checks.
Credit checks are allowed within the confines of the law.29 Financial institutions are required to provide credit information on individuals to licensed credit bureaux. Upon a request by an individual, the credit bureau may provide relevant information, including financial standing.
XII DISCONTINUING EMPLOYMENT
An employee may be dismissed without cause under the common law, which is part of Ghana law. However, an aggrieved party may petition the court on the grounds of unfair termination under the Labour Act.
There is no requirement to notify any government authority when an employee is dismissed. In practice, the employer may consult the trade union with respect to dismissals of employees as regulated by the various collective bargaining agreements in place.
The Labour Act30 provides for what amounts to fair and unfair termination. A termination is fair where the worker is incompetent or lacks the qualification in relation to the work for which he or she was employed. However, a termination may be unfair where the only reason for the termination relates to the worker’s joining a trade union or seeking office in the capacity of a workers’ representative, or on the basis of a worker’s gender, race, colour, ethnicity, social, political or economic status.
An employee whose termination is unfair may seek remedies by referring the matter to the Labour Commission. The remedies available include reinstating the worker from the date of termination, re-employment or ordering the employer to pay compensation. An employer generally may not be required to assist in the search for suitable alternative employment but will be required to do so in the case of a redundancy.
Subject to the employment contract and the labour laws, an employer may be required to provide written notice of termination or pay a salary in lieu of such notification.
Parties to an agreement may decide to enter into a settlement agreement, which shall be recognised and respected by the courts in the resolution of their dispute or disagreement.
Where an employer contemplates a major change in organisation, programme, structure or technology that is likely to result in terminations of employment of workers, the employer must follow the procedure provided by law.31 No distinction is made between a mass lay-off, collective dismissal or reduction in force, and each may be categorised as a redundancy. The employer is required to notify the Chief Labour Officer and the Trade Union at least three months before the contemplated changes, providing the reasons and all relevant documentation regarding the changes. Furthermore, the trade union concerned must be consulted on the measures that the company is taking to avert or minimise the adverse effects of any termination, including finding alternative employment.
The employee who is being made redundant is entitled to redundancy pay in addition to any accrued benefits prior to the closedown or amalgamation of the company. The amount of redundancy pay may be subject to negotiations between the employer or his or her representative and the worker or the trade union.
The employer and employee may enter into a settlement agreement in the event of a contemplated redundancy, which shall be respected by the courts. However, where there is a dispute with regard to redundancy pay and terms and conditions of payments, reference may be had to the Labour Commission whose decision, subject to any other law, is final.
XIII TRANSFER OF BUSINESS
There is no legislation in Ghana for the automatic transfer of employment contracts in the event of a transfer, merger, acquisition or outsourcing contract. It is therefore imperative that such provisions are contained in the necessary documentation of transfer in order to adequately cover the transfer and continuing engagement of the employees.
Ghana’s economic growth, which had slowed from 4 per cent in 2014 to 3.7 per cent in 2017, is expected to recover to 8.8 per cent in 2017 because of various macroeconomic stability factors,32 according to the Africa Development Bank Group. Unemployment rates in sub-Saharan Africa have been forecasted to remain at 7.2 per cent according to the latest World Employment Social Outlook Trends Report 2017 of the International Labour Organisation.
The above projections notwithstanding, Ghana has a new government, who have traditionally been considered pro-business and are likely to boost the fortunes of the economy in the near future. Job creation has been one of the cornerstones of the manifesto of the incoming government and we are likely to witness creation of opportunities towards an improved economy.
1 Paa Kwesi Hagan is a managing partner at Globetrotters Legal.
2 The Constitution of the Republic of Ghana, 1992.
3 Article 24 of the Constitution, 1992.
4 Labour Act, 2003 (Act 651).
5 The Commission on Human Rights and Administrative Justice Act 1993 (Act 456).
6 Section 135–152 of the Labour Act.
8 Article 17 (3) of the 1992 Constitution defined ‘discriminate’ as follows ‘means to give different treatment to different persons attributable only or mainly to their respective descriptions by race, place of origin, political opinions, colour, gender, occupation, religion or creed, whereby persons of one description are subjected to disabilities or restrictions to which persons of another description are not made subject or are granted privileges or advantages which are not granted to persons of another description.’
9 Section 12 of Act 651.
11 Section 17(1) of Act 651.
12 An established place of business is defined to include a branch, management, share, transfer, or registration office, mine or any other fixed place of business, but does not include an agency unless otherwise excepted under law.
13 Section 302 of the Companies Act, 1963, Act 179.
14 Sections 162 and 163 of Internal Revenue Act, 2000 (Act 592).
15 Sections 160 of Act 592.
16 National Pensions Act 2008, Act 766 and Section 139(2) of Act 651.
17 Herbert Morris v. Saxelby  AC 688.
18 Section 35(2) of Act 651.
19 Immigration Act 2000, Act 573.
20 Section 31 of Act 573.
21 Section 28 of the Ghana Investment Promotion Center Act, 2013 (Act 865).
22 Regulation 19 of the Petroleum (local content and local participation) Regulations, 2013 (LI 2204).
23 See LI 2204.
24 Article 21 of Constitution, 1992 and Section 79 of Act 651.
25 Data Protection Act, 2012 (Act 843).
26 Section 27 of the Data Protection Act.
27 Section 31 of Act 843.
28 Section 96 of Act 843.
29 Credit Reporting Act, 2007 (Act 726) and Section 36 of the Data Protection Act.
30 Sections 62 and 63 of Act 651.
31 Section 65 of Act 651.
32 See afdb.org/en/countries/west-africa/ghana/ghana-economic-outlook.