Lex Mundi Labor and Employment Desk Book
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1 Lex Mundi Labor and Employment Desk Book CONTACT INFORMATION: Rosa Kudoadzi Partner Amina Kaguah Senior Associate P.O. Box GP 1632, Accra, Ghana Tel: Office: , , Fax: Ghana 1. Is there a baby WARN Act in your state and if so, what does it require? There is no special baby WARN Act in Ghana. However, redundancies can only be declared in accordance with the provisions of the Labour Act, 2003, (Act 651) (Labour Act) and the relevant employment contract or collective bargaining agreement (CBA) where employees are unionized. The Labour Act applies to all categories of employers and employees except the Armed Forces, the Police Service, the Prison Service and the Security and Intelligence Agencies specified under the Security and Intelligence Agencies Act 1996 (Act 526). There is no requirement that the company must have at least 100 employees and plan to lay off more than 50 workers or more than one-third of its workforce
2 Pursuant to section 65(1) of the Labour Act, an employer can only lawfully terminate the employment of its employees on the grounds of a redundancy exercise where the employer contemplates a close down or the introduction of major changes in production, program, organization, structure or technology of its business on the basis of which the employment of the employees will be terminated. The employer is required to give a notice in writing to the Chief Labour Officer not later than three months before the contemplated changes or close-down setting out all relevant information including the reasons for the termination, the number and categories of employees to be affected and the period within which the termination is to be carried out (Labour Act, section 65(1)). The employer is also required to notify the relevant union if employees are unionized (the Union ) of the redundancy exercise (Labour Act, section 65(1)). The notification must be in writing and must be delivered three months before the contemplated changes or close down. The notification must also specify the reasons for the terminations, the number and categories of employees to be affected and the period within which the termination is to be carried out. The employer is further required to consult with the Union on measures to mitigate the adverse effects of the terminations on the employees such as finding alternative employment. Pursuant to section 66 of the Labour Act, exceptions apply only to the following categories of employees namely: a. Employees engaged under a contract of employment for specified period to do specified work; b. Employees serving a period of probation or qualifying period of employment of reasonable duration determined in advance; and c. Employees engaged on a casual basis. An employer may therefore declare employee redundancies only when one of the following situations exist (a) the business ceases to exist, (b) the place of business is moved and (c) the business no longer requires the same number of employees to carry out work of a particular kind 1 and there is a diminution or cessation in relation to any work that the employees could have been asked to do. 2 Where a redundancy situation as defined in any of the categories listed above exists, the employer must adopt reasonable criteria for the selection of employees to be made redundant and apply those criteria reasonably and fairly. In particular, if the company adopts criteria for redundancy other than length of service, it must be able to show that those criteria were reasonable, and were fairly, rationally and objectively applied on a reasonably structured and comparable basis. 3 Additionally, the company must comply strictly with any agreed procedure or customary arrangements in the redundancy selection. Pursuant to section 65(2) of the Labour Act, redundancy pay is payable where the employer s company/organization is closed down or undergoes an arrangement or amalgamation and the close down, arrangement or amalgamation causes: 1 Kwapong v. Ghana Cocoa Marketing Board and Others [ ] 1 GLR p Id.@ p. 87, 88 The courts have also held at page 87 that there is no redundancy if the positions of the employees that are made redundant still subsist and are subsequently filled, as there has been no cessation or diminution in relation to these positions. What happens then is a mere re-organization, and redundancy will not be a valid ground for dismissal in such a situation. 3 p
3 a. a severance of the legal relationship of employer and employee as it existed immediately before the close down, arrangement or amalgamation; and b. as a result of and in addition to the severance that person becomes unemployed or suffers any diminution in the terms and conditions of employment. In determining whether the employees have suffered any diminution in their individual terms and conditions of employment, section 65(3) of the Labour Act requires that an account must be taken of the past services and accumulated benefits, if any of the employees in respect of the employment with an employer before the changes were carried out. The amount of any redundancy pay as well as the terms and conditions of payment are matters for negotiation between the employer or his representative and the employee or his/her trade union (Section 65(4) of the Labour Act). Any aggrieved employee may refer disputes relating to the redundancy pay and the terms and conditions of payment to the Labour Commission for settlement and the decision of the Labour Commission shall subject to any other law be final. 2. Are there special rules on releases/waivers in your state? No. There are no rules on releases/waivers in Ghana. As a matter of practice, employees who are retrenched may agree to sign waivers. Please note that under Ghana law, there are no age discrimination redundancies. Please see discussion on redundancies under 1 above. 3. Are there protected categories beyond Title VII in your state? No. Protection granted by article 17 of the 1992 Constitution and section 14 (e) of the Labour Act are the same as granted under Title VII, i.e. prohibition against discrimination against a person on grounds of gender, race, color, ethnic origin, religion, creed or social or economic status 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. 4. What are the minimum wage and overtime rules in your state, beyond FLSA? Minimum Wage The current daily minimum wage in Ghana is 16,000 ($1.5). Under section 113 of the Labour Act, the National Tripartite Committee established under the Labour Act is responsible for determining the daily minimum wage. When the daily minimum wage is determined by the National Tripartite Committee, the Minister for Youth and Manpower Development publishes a notice of the national daily minimum wage in the Gazette and in such public media as he may determine. Overtime By practice, overtime rate in Ghana is 1½ times an employee's daily regular rate of pay for all overtime work done during the week and 2 times an employee s regular rate of pay for all work done at the week end. Under section 35 of the Labour Act, where an employee in an undertaking works after the hours of work fixed by the rules of that undertaking, the additional hours done must be regarded as overtime work
4 An employee may not be required to do overtime work unless the undertaking has fixed rates of pay for overtime work. Further, an employee shall not be compelled to do overtime work except for undertakings or enterprises the very nature of which require overtime in order to be viable or undertakings which are subject to emergencies that require that workers engage in overtime work in order to prevent or avoid threat to life and property. Notwithstanding the above however, under section 38 of the Labour Act, an employee may be required to work beyond the fixed hours of work without additional pay in certain exceptional circumstances including an accident threatening human lives or the very existence of the undertaking. Under section 55 of the Labour Act, an employer cannot engage a pregnant woman or a mother of a child of less than eight months old for over time without her consent. Thus, a pregnant woman or a mother of a child of less than eight months who has been engaged for overtime work may present a written complaint to the National Labour Commission against an employer. Under section 76 of the Labour Act, a temporary employee or a casual employee who is engaged for overtime is entitled to be paid for overtime work by his or her employer. Under section 81 of the Internal Revenue Act 2000, (Act 592) and Regulation 28 of the Internal Revenue Regulations, (LI 1675) overtime pay is added to employee s income and taxed at the prevailing income tax rate Is there employment-at-will or some other rule in your state? There is no employment at will in Ghana. Under section 12 of the Labour Act, every contract of employment for a period of six months or more or for a number of working days equivalent to six months or more within a year shall be secured by a written contract of employment. Unless the contract of employment stipulates terms which are more beneficial to the employee, an employment contract may be terminated in the following situations: by mutual agreement between the employer and the employee; by the employee on grounds of ill-treatment or sexual harassment; by the employer on the death of the employee before the expiration of the period of employment; by the employer if the employee is found on medical examination to be unfit for employment; by the employer because of the inability of the employee to carry out his or her work due to sickness or accident, incompetence of the employee or proven misconduct of the employee (section 15 of the Labour Act). A termination is fair if the contract of employment is terminated on any of the following grounds: 4 Under the 2006 budget statement, over time is taxed as follows: The first 1.200, 000 (%110) 2.5% Between 1.200, 000-4,000,000-10% Overtime earnings in excess of 4,000,000 is added to the employee s income and taxed at the prevailing income tax rate
5 that the employee is incompetent or lacks the qualification in relation to the work for which the employee is employed (section 62(a) of the Labour Act; proven misconduct of the employee (section 62(b) of the Labour Act; redundancy section 62(3) of the Labour Act; and due to legal restriction imposed on the employee prohibiting the employee from performing the work for which he or she is employed to do. A termination is unfair if the employee is terminated on grounds of gender, race, color, ethnicity, origin, religion, and creed, social, political or economic status. Remedies for unfair termination An employee, who believes that he has been terminated unfairly, may present a petition to the Labour Commission. If upon investigation, the Labour Commission finds the termination to be unfair, it may order the employer to reinstate or re-employ the employee either in the work for which he was employed before the termination or in other reasonably suitable work on the same terms and conditions (section 64 of the Labour Act). The Labour Commission may also order the employer to pay compensation to the employee. 6. What are the obligations upon terminating an employee in your state? Under section 18 of the Labour Act, when a contract of employment is terminated the employer is required to pay to the employee: any remuneration earned by the employee before the termination; any deferred pay due to the employee before the termination; any compensation due to the employee in respect of sickness or accident; in the case of a foreign contract, the expenses and necessaries for the journey and repatriation expenses in respect of the employee and accompanying members of his or her family in addition to all of the payments specified above; and where an employer terminates the employment of an employee without giving him notice, the employer is required to pay the employee a sum equal to the amount of remuneration which the employee would have received. Further, the Employee must not be deprived of any other grants or awards to which the employee is entitled including payment in lieu of notice of termination. This however does not apply in cases where the employer has the right to dismiss an employee without notice. The employer is required to pay to the employee not later than the date of expiration of the notice of termination all remuneration due to the employee as at that date. Where no notice is required, the payment of all remuneration due should be made not later than the next working day after the termination. 7. Are there Family and Medical Leave Laws in your state beyond the FMLA if so what do they require? No
6 Family/Medical leave The relevant provisions are summarized below. A person certified by a medical practitioner to be unwell is allowed a period of absence from work. Such period of absence is not computed as part annual leave (Labour Act, section 24). A female employee on production of a medical certificate issued by a medical practitioner or a midwife indicating the expected date of her confinement, is entitled to a period of maternity leave of at least twelve weeks in addition to any period of annual leave she is entitled after her period of confinement (Labour Act, section 57(1). The period of maternity leave may be extended for at least two additional weeks where the confinement is abnormal or where in the course of the same confinement two or more babies are born Labour Act section 57(3). Additionally, a female employee who is medically certified by a medical practitioner as being ill due to her pregnancy is entitled to additional leave as certified by the medical practitioner (section 57 (4) of the Labour Act.). A female employee on maternity leave is entitled to be paid her full remuneration and other benefits to which she is otherwise entitled (Labour Act, section 57(2). 8. Please list any miscellaneous interesting or oddball laws in your state and describe what circumstances they pertain. The Workmen s Compensation Law 1987 (PNDCL 187) (Workmen s Compensation Law), and the Workmen s Compensation (Calculation of Compensation) Instrument, 1994 (L.I. 1594), govern compensations and calculations thereof payable by employers to employees in respect of injuries sustained by them in the course of their duties. Pursuant to section 2 (1) of the Workmen s Compensation Law, if an employee sustains personal injury by accident arising out of and in the course of his employment, his employer is liable to pay compensation. An injured employee must not suffer any reduction in his earnings while he undergoes treatment for injuries sustained by him through an accident arising out of and in the course of his employment (section 2(2) of the Workmen s Compensation Law). Additionally, an employer is required to pay the injured employee compensation commensurate with the incapacity so assessed (section 2(3) of the Workmen s Compensation Law). An employer is not liable to pay any compensation to the injured employee if the injury resulted from an accident, attributable to the influence of drink or drugs (section 2(5) of the Workmen s Compensation Law). No compensation is also payable in respect of any incapacity or death resulting from a deliberate self-injury or personal injury, or a false representation of injury suffered. An employer is also required to pay the injured employee s full salary for any time taken off work for treatment and compensation commensurate with the incapacity assessed (section 2(2) and (3) of the Workmen s Compensation Law). Additionally, an employer is obliged to pay all the medical expenses of an injured employee. If the injury results in the death of the employee, an employer is under an obligation to pay compensation equal to sixty (60) months' earnings if the injured employee leaves any dependants (section 3(1) (a) of the Workmen s Compensation Law). If death results from injuries sustained by an employee, an employer is required to pay the Injured Employee s medical expenses whether he had dependants or not (section 3 (1) (b) of the Workmen s - 6 -
7 Compensation Law). If the employee left no dependants, all his burial expenses would be borne by the employer as required by custom or as stipulated in the contract of employment of the employee. Even if an employee survives an injury, the employer is entitled to pay all his medical expenses whether he has dependants or not (sections 3 (1) (d) and 3 (2) of the Workmen s Compensation Law). Under the Workmen s Compensation Law, the determining factor in the payment of compensation by the employer to an injured employee is that the injury must have been sustained in the course of his duties. Where an injured employee refuses to be examined, the employer may suspend the employee s right to compensation until the examination has taken place. If the refusal extends for a period of fifteen (15) days, the employer is not liable to pay any compensation unless the Court is satisfied that the Injured Employee had reasonable cause for the refusal (section 14 (4) of the Workmen s Compensation Law). An employer is still liable to pay compensation even if the injured employee refuses treatment as indicated, or disregards the instructions of the medical practitioner (section 14(8) of the Workmen s Compensation Law. Under such circumstances, if it is proved that the refusal or disregard being unreasonable, had aggravated the injury, and resulted in incapacity, the injury is deemed to be of the same nature and duration as might reasonably have been expected to be if he had submitted himself for treatment and adhered to the instructions of the medical practitioner. If such circumstances result in the death of the injured employee, the employer would not be liable to pay any compensation unless the court is satisfied that there was a reasonable cause for the refusal (sections 14(8) and (10) of the Workmen s Compensation Law). Calculation of compensation payable The Workmen s Compensation Law provides the formulae for calculating compensation payable to injured employees for five (5) categories of injuries namely: permanent total incapacity; permanent partial incapacity; temporary total incapacity; temporary partial incapacity; and disfiguring injuries (sections 5, 6 and 7). (i) Permanent total incapacity If permanent total incapacity results from the injury to the employee, the compensation payable is the sum of ninety-six (96) months earnings, i.e. the employee s monthly salary for the previous twelve (12) months if he has been employed for that long by the same employer but, if not, then for any less period of employment by the same employer (sections 5 and 9 of the Workmen s Compensation Law). Generally the maximum earning payable has been pegged at 12,176, 591 ($1300) per annum (which is equivalent to the maximum annual salary of a Higher Executive Officer in the Civil Service) for purposes of calculating compensation payable for injuries suffered on the job. Thus compensation payable to an employee for injury resulting in a permanent total incapacity is 12,176,591($1300) divided by 12 and multiplied by 96. (ii) Permanent partial incapacity If the injury to the employee results in permanent partial incapacity, the compensation payable, is a percentage of the compensation which would have been payable in the case of a permanent total incapacity - 7 -
8 specified as the percentage of the loss of earning capacity caused by that injury (section 6(a) of the Workmen s Compensation Law). For injuries not specified in the Workmen s Compensation Law, a percentage of the compensation which would have been payable for permanent total incapacity and proportionate to the loss of earning capacity permanently caused by the injury should be paid (section 6(2) of the Workmen s Compensation Law). Further, if more than one injury is caused by the same accident, the compensation payable must be aggregated but it shall not in any case exceed the amount payable if permanent total incapacity had resulted from the injuries. (iii) Temporary incapacity (total or partial injury) Where temporary incapacity, whether total or partial, results from the injury, the compensation shall be the periodical payments a lump sum calculated accordingly, having regard to the probable duration, and probable changes in the degrees, of the incapacity (section 7(1) of the Workmen s Compensation Law. The periodical payment is the difference between the salary per month of the employee at the time of the accident and the salary per month which he is earning or is capable of earning in some other suitable employment or business after the accident (section 7(2) of the Workmen s Compensation Law. However, the lump sum or aggregate of periodical payments should not exceed the lump sum payable in respect of the same degree of incapacity in circumstances of permanent total incapacity or permanent partial incapacity as the case may be, if the incapacity were permanent (section 2(a) of the Workmen s Compensation Law) Payments of periodical payments should not exceed twenty-four (24) months unless the Chief Labour Officer in his discretion so directs for a further period not exceeding six (6) months (section 2(c) of the Workmen s Compensation Law). Any periodical payments already made for permanent incapacity following a temporary total incapacity or temporary partial incapacity, must not interfere with any lump sum payable in circumstances of permanent total incapacity or permanent partial incapacity (section 2(d) of the Workmen s Compensation Law). If the incapacity of the injured employee ceases before the date on which any periodical payment is due, the employer is required to pay a sum proportionate to the duration of the incapacity in that period (section 7(3) of the Workmen s Compensation Law). (iv) Disfiguring injuries In cases of a disfiguring injury the employee is entitled to an amount for such injury determined by a certified medical practitioner and should not exceed the percentage of compensation payable in instances of permanent total incapacity (section 8 of the Workmen s Compensation Law). The compensation payable for disfiguring injuries is irrespective of whether or not any compensation is payable under any other provision of the Workmen s Compensation Law. Similarly, if the accident causes more than one injury, the compensation must be aggregated, but should not exceed that payable if permanent total incapacity has resulted from the injuries (sections 8(2) and (3)
9 Persons with Disability Bill The Persons with Disability Bill (the Bill) is yet to be passed by Parliament. Section 9 of the Bill provides for the establishment of employment centers by the Ministry of Manpower, Youth and Employment centers to secure jobs for persons with disability. Under section 10 of the Bill, a person who employs a person with disability is entitled to an annual tax rebate of the taxable income in respect of each person with disability. Temporary Assignment for injured workers. The Labour Act does not make provision for the temporary assignment of injured employees. Under section 63 of the Labour Act however it is unfair termination if an employer terminates the services of an employee for the sole reason that he is temporarily ill or injured, when his illness or injury has been certified by a recognized medical practitioner. However, an employer has the right to terminate the employment of an employee because of the inability of the employee to carry out his or her work due to sickness or accident or if the employee is found on medical examination to be unfit for employment. The Labour Act however makes provision for the reassignment of employees who suffer disability while in employment. Section 50 of the Labour Act provides that the employment of a person, who suffers disability after the employment, shall not cease if his residual capacity for work is such that he can be found employment in the same or some other corresponding job in the same undertaking. Thus pursuant to section 52 of the Labour Act, a person with disability in employment may be transferred to another job within the same undertaking if the other job can be regarded in the light of all relevant circumstances as a corresponding job. If no such corresponding job can be found, the employment may be terminated by notice. Meal or Rest Break Where the normal hours of work are continuous, an employee is entitled to at least thirty minutes break in the course of the work, but the break forms part of the normal hours of work. Where the normal hours of work are in two parts, the break should not be less than one hour duration and does not form part of the normal hours of work (Labor Act, section 40). An employee must be granted a daily continuous rest of at least twelve hours duration between two consecutive working days. The daily rest of the employee in an undertaking operating on a seasonal basis may be of less than ten hours but not more than twelve hours' duration over a period of at least sixty (60) consecutive days in the calendar year (Labour Act, section 41). Breast Feeding and Expression of Breast Milk A nursing mother is entitled to interrupt her work for an hour during her working hours to nurse her baby. Interruptions of work by a nursing mother for the purpose of nursing her baby are treated as working hours and paid for accordingly ( Labour Act, section 57 (6). Weekly payment of wages In Ghana, salaries/wages are paid monthly in arrears as a matter of practice. However, under section 16 (b) of the Labour Act, employees may be paid weekly wages if their contracts are from week to week. Criminal History in Job applications Under Ghana law, there is no requirement for a person applying for a job to indicate his criminal history. However, as a matter of practice, some employers require persons applying to them for employment to include a statement on their criminal history
10 Notice of electronic surveillance There are no laws in Ghana requiring notification of electronic surveillance. Article 18 of the 1992 Constitution however guarantees the privacy of every person in Ghana. Article 18 of the 1992 Constitution provides that no person shall be subjected to interference with the privacy of his home, property, correspondence or communication except in accordance with law and as may be necessary in a free and democratic society for public safety or the economic well-being of the country, for the protection of health or morals, for the prevention of disorder or crime or for the protection of the rights or freedoms of others. Under section 5 of the National Communications Regulations, 2003, (LI 1719), it is a breach of the principle of privacy and secrecy of communication if a person, other than the sender or the intended recipient of a transmitted message or data, steals, intercepts, interferes with, alters or modifies, diverts, unlawfully discloses, decodes or attempts to decode a transmitted message or data or facilitates any such act. This applies to operators and consumers of communications services including employees and agents of operators as well as other persons who gain or obtain access to the contents of any transmitted message or data in the course of their work. In the case of drug related offences, however, section 27 of the Narcotic Drugs (Control, Enforcement and Sanctions) Law, 1990 (PNDCL 236) ( Narcotic Drugs Law ), empowers a magistrate or a District Tribunal to authorize a police officer to intercept, detain and open any postal article in the course of transmission by post, to intercept any message transmitted or received by any telecommunication, to intercept or listen to any conversation by any telecommunication. 9. Does your state have a law requiring employers to give employees access to or a copy of their personnel records No, under Ghana law, employers are not required to give employees access to or copies of their personnel records. The employer is only required within two months after the commencement of the employment, to furnish the employee with a written statement of the particulars of the main terms of the contract of employment. These particulars must be in the prescribed form and must be signed by the employer and the employee. 10. Does your state outlaw or restrict drug tests, alcohol tests, genetic tests or any other kind of testing No. Drug Test The Narcotic Drugs Law, allows a medical officer who is authorized, to conduct a medical examination both externally and internally on a person for the purpose of any investigation under the Narcotic Drugs Law. The Labour Act however does not require or entitle employees to carry out drug test as part of the employment process. However, it is becoming increasingly common for the employers to request full medical examination, which includes drug tests as a prerequisite for employment. Alcohol test
11 Under section 6 (a) of the Road Traffic Act 2004, (Act 683), where a police officer has reasonable cause to suspect that a person driving or attempting to drive on a road has alcohol in his body or has committed a traffic offence while the motor vehicle was in motion, the police officer may require that person to provide a specimen of breath for a breath test. Also, where an accident occurs owing to the presence of a motor vehicle on a road, a police officer may require any person who the police officer has reasonable cause to suspect was driving or attempting to drive the motor vehicle at the time of the accident to provide a specimen of breath for a breath test (section 6(b) of the Workmen s Compensation Law). Under section 7(1) of the Road Traffic Act, failure to provide a specimen of breath when required to do so amounts to an offence and the person is liable on summary conviction to a fine not exceeding 500 penalty units or to a term of imprisonment not exceeding 2 years or to both. Under the Fines (Penalty Units) Act, 2000 (Act 572) as amended, one penalty unit is equal to 120, ($13). Genetic Tests Under section 47 (f) of the Courts Act, 1993 (Act 459), the District Court has civil jurisdiction in matrimonial causes or matters and actions for paternity. 11. Does your state have any special rules on the payment of sales commission? No. There are no special rules on the payment of sales commission in Ghana. Sales commission contracts are enforced in accordance with their terms and conditions. Under section 84 of the Internal Revenue Act, where a resident person, other than an individual, pays fees to a commission, sales, or canvassing agent, the person making the payment is required to withhold tax at the rate of 10%. 12. What are the basic rules on enforcing non-competes and related agreements in your state? There are no rules on enforcing non-compete and related agreements in Ghana. Non-compete agreements are contractual and are therefore enforced in accordance with their terms
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