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Hiring in ghana? Read on to find out the employment norms (like taxes, payroll and benefits) and EOR (Employer on Record) norms in Ghana
Employment Norms in ghana
Ghana has a complex set of employment laws and regulations that cover everything from minimum wage to termination procedures. For employers and employees alike, it's important to understand these norms to ensure compliance and avoid legal issues. In this article, we'll provide an overview of the most important employment norms in Ghana, including working hours, employee benefits, and more.
General Information:
- Ghana's currency is the Ghanaian cedi (GHS).
- Accra is the capital of Ghana.
- The official language of Ghana is English. Legal documents need to be drafted in English to be considered legally valid.
- As of 2022, the GDP of Ghana was reported to be 287.27 USD billion.
Ghana's labor laws cover minimum wage, working hours, employment contracts, leave entitlements, termination, and discrimination
Table of Contents
- Agreements
- Onboarding Process
- Visa
- Minimum Wage
- Payroll Cycle
- Annual Bonus
- Health Benefits
- Working Hours and Overtime
- Leaves
- Social Security
- Taxes for Employers
- Taxes for Employees
- Probation
- Termination
- Severance Pay
- Employees or Contractors
- Final Words
AgreementsOnboarding ProcessVisaMinimum WagePayroll CycleAnnual BonusHealth BenefitsWorking Hours and OvertimeLeavesSocial SecurityTaxes for EmployersTaxes for EmployeesProbationTerminationSeverance PayEmployees or ContractorsFinal Words
Agreements
In Ghana, labor and employment-related agreements are governed by several laws and regulations, including the Labor Act, the Social Security and National Insurance Trust Act, and the National Pensions Act. Below are some key points related to these agreements. Employment contracts should be in writing and must specify the terms and conditions of employment, including the job description, duration of employment, and remuneration. In Ghana, employment contracts are typically drafted in the English language.
- There are various types of employment contracts, including permanent, fixed-term, part-time, and temporary contracts.
- Employers must provide employees with a written statement of their terms and conditions of employment within two months of starting work.
Onboarding Process
In Ghana, the onboarding process typically involves the following steps:
- Orientation and introduction to the company and its culture
- Introduction to colleagues and supervisors
- Explanation of job responsibilities and expectations
- Completion of the necessary paperwork, such as employment contracts, tax forms, and bank account information
- Training and development to ensure employees have the necessary skills to perform their job
Some of the mandatory documents that employees may be required to submit during the onboarding process include:
- National identification card
- Passport or birth certificate
- Educational certificates or transcripts
- Employment reference letters or CV
Visa
Ghana has several types of work permits and visas, check the ones discussed below:
- Work permit: It is required by foreign nationals who want to work in Ghana
- Residence permit: This permit is required by foreign nationals who want to reside in Ghana for some time
- Business visa: A business visa is required by foreign nationals who want to conduct business activities in Ghana for a short period
- Tourist visa: This type of visa is required for foreign nationals who want to visit Ghana for tourism purposes
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Minimum Wage
The minimum wage in Ghana is GHS 14.88 per day from GHS 13.53. This applies to all workers regardless of industry or job position. It is subject to periodic review by the government to ensure that it keeps up with the cost of living.
Payroll Cycle
Employees in Ghana are paid on monthly basis. Some companies also pay their employees in 15 days.
Annual Bonus
There is not any provision for bonuses or 13th-month pay in Ghana. Though some employers may choose to provide it as an incentive to employees. It is up to individual employers to decide if they want to provide bonuses and what would be the amount.
Health Benefits
In Ghana, employers may choose to offer health benefits to their employees, although it is not mandatory. Some of the common health benefits that employers may provide include:
- Medical insurance coverage
- Dental care coverage
- Vision care coverage
- Paid sick leave
- Mental health services
- Wellness programs
Working Hours and Overtime
Here are the details on working hours, days, breaks and overtime norms followed in Ghana:
- Work hours: In Ghana, the standard working hours are 8 hours per day and 40 hours per week. People work from Monday to Friday.
- Break: It is common practice for employees to receive a one-hour break after working for four hours.
- Overtime: In terms of overtime, while there is no set rate by law, employees generally receive 150% of their regular rate for overtime done on a weekday and 200% for overtime done on weekends and public holidays.
Leaves
Annual leaves
- Employees can avail of 15 working days of annual leave.
Sick Leave
- Sick leave is not mandatory in Ghana, and it is typically based on mutual agreement between the employer and the employee. Employers may offer paid or unpaid sick leave, depending on the agreement they had at the time of hiring.
Maternity and Paternity Leave
- Female employees are entitled to 12 weeks of maternity leave. The employer has to pay the full salary during this period to the employee. Additionally, female employees can extend their leaves for two more weeks additionally with 100% pay. This can be done if the employee has some illness related to pregnancy or she has conceived more than one child.
- There is not any provision for paternity leave for now in Ghana.
Parental leaves
- There are no specific provisions for parental leave in Ghana, although employees are entitled to avail of paternity or maternity leave.
Public Holidays (for the Calendar year 2023)
- New Year's Day (1st January)
- New Year's Day observed (2nd January)
- Constitution Day (7th January)
- Independence Day (6th March)
- Good Friday (7th April)
- Easter Monday (10th April)
- Eid ul-Fitr (Tentative Date) (22nd April)
- May Day (1st May)
- Eid al-Adha (Tentative Date) (29th June)
- Founders' Day (4th August)
- Kwame Nkrumah Memorial Day (21st Sepember)
- Farmer's Day (1st December)
- Christmas Day (25th December)
- Boxing Day (26th December)
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Taxes for Employers
The following are some of the taxes that employers in Ghana are required to pay:
- Employers contribute 13% to the Social Security
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Taxes for Employees
Employees in Ghana are subject to various taxes, including income tax and social security contributions.
- The income tax rate is progressive, with rates ranging from 0% to 30% based on income level.
- An employee with an income of GHS 4380 has to pay 0% tax.
- Employees earning GHS 1320 have to pay a 5% tax.
- Those earning GHS 1,560 need to pay the tax of 10%.
- The income group that comes between GHS 36,000 pays a tax of 17.5%.
- The employees earning between GHS 196,740 pays 25% tax.
- Those earning more than GHS 240,000 pays the 30% tax.
- Employees are also required to contribute to social security, with a combined rate of contribution of 5.5%.
Probation
The probationary period in Ghana for employees depends on the discretion of employers. The employer should ensure that the probation period is in accordance with labor laws.
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Termination
Termination rules in Ghana are straightforward and should be done properly abiding by the law:
- Taken voluntarily by the employee.
- Unilaterally by the employer on the basis of redundancy, misconduct, if the employee lacks the necessary qualification for the job or some legal restrictions on an employee that do not allow them to perform the job.
- On the basis of mutual agreement.
Some examples of wrong or improper termination are as follows:
- if an employee intends to join the trade union.
- if a pregnant employee is terminated due to maternity leave or their absence due to pregnancy.
- if termination is based on an employee's religion or race.
- if an employee has some kind of disability.
- if the termination is forced due to the employer's inappropriate action after an employee has lodged the harassment complaints.
Severance Pay
There is no provision for severance payments in Ghana. While serving the notice period, the employee received their standard wages. Negotiation is done between the employee and the employer if it is a case of redundancy.
Employees or Contractors
- In Ghana, an employee is an individual who has entered into a contract of service with an employer, while a contractor is a person or organization that provides services to clients on a contractual basis.
- The distinction between employees and contractors is important as it determines the rights, benefits, and obligations of the parties involved.
- Misclassifying an employee as a contractor and vice versa can result in significant penalties for the employer.
- Employers who misclassify employees as contractors may be liable for back payment of salaries and benefits, payment of unpaid taxes and contributions, and fines.
Final Words
Ghana has established legal requirements for labor laws and employment norms. Employers need to abide by these laws and regulations to ensure a fair and just work environment. Employees are entitled to certain benefits and leaves, and employers must comply with payroll and tax regulations. Employers must also be cautious about correctly classifying employees and contractors to avoid legal penalties. Overall, it is essential to have a good understanding of employment norms and laws in Ghana to avoid any legal and financial consequences.
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