Termination and Redundancy of Employment in Ghana: What the Labour Act Requires

What does Ghanaian law require before a job ends? Notice is part of the answer, not the whole of it. Under the Labour Act, 2003 (Act 651), ordinary termination, dismissal for misconduct and redundancy raise different questions about reasons, procedure and pay. This article sets out that baseline for employees and small employers. The contract, and any collective agreement, still have to be read alongside it.

Three different ways employment can end

Termination means ending the contract of employment. Section 15 lists the routes: mutual agreement; the worker ending it for ill-treatment or sexual harassment; and employer grounds covering the worker's death, medical unfitness, inability to work because of sickness or accident, incompetence, and proven misconduct.

A fair termination is one section 62 treats as fair, on one of four grounds: incompetence or lack of qualification for the work; proven misconduct; redundancy under section 65; or a legal restriction stopping the worker doing the work. The label proves nothing. Section 63(4) says a termination may be unfair if the employer fails to prove a fair reason, or a fair procedure or compliance with the Act.

Summary dismissal is the ordinary name for ending employment without the employee working a notice period, usually said to be for serious misconduct. The Act neither defines the phrase nor sets a checklist for it. Proven misconduct can be a fair ground, and notice has its own rules. The word "summary" does not, on the text, remove either.

Redundancy is not a synonym for dismissal. Section 62 treats redundancy under section 65 as a fair ground, and section 65 concerns organisational change, not an individual's conduct. The duties and the pay differ.

What notice the Act requires

Notice is written advance warning that one party is ending the contract. Section 17 allows either party to terminate by giving the other:

• one month's notice, or one month's pay instead of notice, where the contract is for three years or more;
• two weeks' notice, or two weeks' pay instead of notice, where the contract is for less than three years;
• seven days' notice, in the case of a contract from week to week.

A contract determinable at will may end at the close of any day without notice. Section 16 gives that character to a contract paid at a rate that is neither monthly nor weekly. Notice under section 17 must be written, and the day it is given counts.

Either party may instead terminate without notice by paying the remuneration the worker would have earned during the notice period. Payment is an option. It is not a reason.

Section 19 disapplies sections 15 to 18 where a collective agreement states termination terms more beneficial to the worker, and a contract may promise longer notice. Check both before relying on the statutory periods.

Pay that falls due when employment ends

Where termination follows section 15, the employer must pay remuneration earned before termination, deferred pay then due, and any compensation due for sickness or accident. A foreign contract also attracts the stated journey and repatriation expenses. Remuneration due is payable by the date notice expires, or, where no notice is required, not later than the next working day.

Reasons that make a termination unfair

Section 63(2) treats a termination as unfair if its only reason is one on a stated list: trade union membership or activity; acting as a workers' representative; a complaint or proceedings against the employer; gender, race, colour, ethnicity, origin, religion, creed or social, political or economic status; pregnancy or maternity leave; disability; certified temporary illness or injury; or a missing current qualification different from the one required at the start. Refusing the work of someone in a lawful strike is also listed, unless that work is needed to prevent actual danger to life, personal safety or health, or to maintain plant and equipment.

Section 63(3) also deems unfair a termination by the worker, with or without notice, for ill-treatment by the employer, having regard to the circumstances, or because repeated complaints of workplace sexual harassment went unaddressed.

The worker may complain to the National Labour Commission. If investigation shows the termination was unfair, the Commission may order reinstatement from the termination date, re-employment in the former or other reasonably suitable work on the same terms, or compensation. Those orders depend on a finding. None follows automatically.

What redundancy requires, and what it does not

The Chief Labour Officer is the official to whom section 65 requires written information. An employer contemplating major changes in production, programme, organisation, structure or technology likely to cause terminations has two duties. Not later than three months beforehand, it must write to the Chief Labour Officer and the trade union concerned, giving the reasons, the number and categories of workers likely to be affected, and the period over which terminations will be carried out. It must also consult that trade union on measures to avert or minimise termination and to limit its effects, such as alternative employment.

Section 65(1) requires information to the Chief Labour Officer, and consultation with the trade union. It does not require consultation with the Chief Labour Officer, or with each affected worker. Speaking to affected employees is often prudent. The section does not say it.

Redundancy pay does not follow every termination labelled a redundancy. Under section 65(2) it arises where an undertaking closes or undergoes an arrangement or amalgamation, the worker's legal relationship is severed, and the worker consequently becomes unemployed or suffers worse terms. Past service and any accumulated benefits count in judging that diminution.

The pay is due from the undertaking that employed the worker immediately before the change. The Act fixes no number of weeks' or months' pay: section 65(4) leaves the amount and terms to negotiation between the employer or its representative and the worker or the trade union. The aggrieved party may refer a dispute to the Commission, whose decision is final, subject to any other law.

Part VIII does not apply to a worker on a contract for a specified period or specified work, a worker on a probation or qualifying period of reasonable duration fixed in advance, or a casual worker. The contract's terms decide, not the label the parties prefer.

Questions worth answering before anyone acts

An employee facing notice can usefully ask what the contract says about length, notice and discipline; whether a stated reason is supported by documents; whether that reason is conduct, capability or a structural change; whether any redundancy has been notified under section 65 to a trade union concerned; and what pay is outstanding, and by when.

An employer should ask the mirror questions: which route is being used, and can the reason be proved; what written notice or pay instead of notice section 17 and the contract require; whether the only real reason is one section 63 treats as unfair; whether a three-month notice and trade-union consultation can be completed before an organisational change; and how redundancy pay will be negotiated if a closure, arrangement or amalgamation leaves a worker unemployed or worse off. The answers mark lines a termination letter often blurs. They do not decide a dispute.

When a letter needs a closer look

The firm's Employment & Labour Law practice reviews proposed terminations, disciplinary records, redundancy plans and employment contracts against the Act. Contact Ohene Gyan & Associates to ask about the scope of an engagement. The answer depends on the contract and the facts. A consultation guarantees no particular result.

Disclaimer

This article is general information, not legal advice. It summarises selected provisions of the Labour Act, 2003 (Act 651), read from a copy of the Act, and does not replace advice on a particular employment relationship or dispute.