Effortless Hiring in Ghana

Employment Laws

Workers' rights in Ghana are protected under several key legislations:

1. The Ghanaian Constitution of 1992: Establishes fundamental rights and freedoms for all citizens.
2. The Labor Act of 2003: Governs labor relations, employment contracts, and worker rights.
3. The National Pensions Act of 2008: Regulates pension contributions and benefits.

These laws ensure:

• Equal Pay: Guarantees equal pay for equal work.
• Non-Discrimination: Protections against discrimination based on age, religion, gender, or race.

Onboarding Process

Employers must adhere to local labor laws during the onboarding process, including:

• Verifying employment eligibility.
• Drafting employment contracts compliant with Ghanaian labor law.
• Registering employees with Ghana’s social security and tax authorities.

Types of Employment Contracts

1. Fixed-Term Contracts: For a specified duration or project, typically not exceeding six months without a written contract.
2. Indefinite Contracts: Common for ongoing employment with no predetermined end date.
3. Casual or Part-Time Contracts: Flexible arrangements based on hours or tasks, often used for seasonal or short-term work.

Probationary Periods

• While Ghanaian labor law does not mandate probationary periods, they are common and typically last between 3 to 6 months, depending on the employer’s policies. Probationary periods allow employers to assess an employee's suitability for the role before confirming their permanent status.

Working Hours

• Standard working hours are generally set at 8 hours per day or 40 hours per week.
• Overtime is compensated based on agreed-upon rates or as stipulated by Ghanaian labor law, typically at a rate of 150% of the regular hourly wage for hours worked beyond the standard hours.

How Cadana Simplifies Hiring in Ghana Cadana supports businesses in Ghana by:

• Ensuring compliance with Ghanaian labor laws during hiring.
• Managing competitive and compliant compensation packages, including guaranteed minimum wages and benefits.
• Offering seamless employee onboarding and payroll solutions tailored to Ghana’s legal framework.

By acting as your Employer of Record (EOR), Cadana ensures a smooth and compliant hiring process for businesses expanding their workforce in Ghana.

Payroll Frequency

In Ghana, the standard payroll cycle is monthly, with employees typically receiving their salaries at the end of each month.

Minimum Wage

As of January 1, 2024, the daily minimum wage in Ghana is set at GHS 18.15. Employers are required to comply with this rate, ensuring that employees receive at least this amount for each day worked. This translates to a monthly minimum wage of approximately GHS 490.05 based on a standard work month.

Payroll Deductions

Employers must make several statutory deductions from employees' salaries, including:

• Pay As You Earn (PAYE) Tax: A progressive income tax deducted at source and remitted to the Ghana Revenue Authority (GRA). Employers are responsible for withholding the appropriate amount based on the employee's earnings. The tax-free threshold for PAYE is currently set at GHS 490 per month.

• Social Security Contributions: Both employers and employees contribute to the Social Security and National Insurance Trust (SSNIT). The standard contribution rates are:

• Employer Contribution: 13% of the employee's basic salary.

• Employee Contribution: 5.5% of their basic salary.

These contributions are essential for the employee's future benefits, including pensions and other social security entitlements.

Additional Payroll Considerations

1. Overtime Compensation: Employees who work beyond the standard hours (typically 40 hours per week) are entitled to overtime pay, which is usually compensated at a rate of 150% of their regular hourly wage.

2. Casual Workers: For casual workers, a flat rate of 5% tax is deducted from payments made, which must be remitted to the GRA.

3. Bonus Payments: Bonuses paid to employees are subject to taxation at a rate of 5% up to 15% of the employee's annual basic salary.

4. Tax Reliefs and Allowances: Employees may be eligible for various tax reliefs based on personal circumstances, such as having dependents or being disabled. These reliefs can help reduce taxable income.

Cadana's Role in Simplifying Payroll Management in Ghana

Cadana offers comprehensive payroll solutions that ensure compliance with Ghana’s labor laws, accurate calculation of salaries and deductions, and timely remittance of statutory contributions.

Employee Income Tax in Ghana

Ghana employs a progressive income tax system with rates ranging from 0% to 35% based on annual chargeable income. The 2024 tax brackets are:

• Up to GHS 5,880: 0% (tax-exempt)

• GHS 5,881 to GHS 7,200: 5%

• GHS 7,201 to GHS 8,760: 10%

• GHS 8,761 to GHS 46,760: 17.5%

• GHS 46,761 to GHS 192,000: 25%

• Above GHS 600,000: 35%

• Employer Contributions: Employers are required to make the following contributions on behalf of employees:

• Social Security Contributions: Employers contribute 13% of the employee's basic salary to the Social Security and National Insurance Trust (SSNIT).

Employers must also withhold and remit Pay As You Earn (PAYE) taxes from employee salaries to the Ghana Revenue Authority (GRA).

By handling these responsibilities, Cadana allows businesses to focus on growth while staying compliant with Ghana’s tax regulations.

Types of Leave in Ghana

1. Parental Leave

• Maternity Leave:

• Pregnant employees are entitled to 12 weeks (approximately 3 months) of paid maternity leave, paid at 100% of their salary by the employer.

• This leave may be extended by an additional 2 weeks in cases of complications during pregnancy or multiple births.

• Paternity Leave:

• There is currently no statutory provision for paternity leave in Ghana. Employers may offer it voluntarily, but it is not mandated by law.

2. Sick Leave

• Ghana does not have a legal provision mandating sick leave. Policies regarding sick leave are determined by individual company policies. Employees may take sick leave based on their employer's discretion, often requiring a medical certificate to justify the absence.

3. Paid Leave

• Annual Leave:

• Employees who have worked for their company for at least 1 year are entitled to a minimum of 15 days of paid annual leave, accrued at a rate of 1.25 days per month.

• Public Holidays:

• Ghana observes 12 national public holidays each year, which do not affect annual leave entitlements.

• Additional Leave:

• Employees may qualify for additional types of leave, such as adoption leave or compassionate leave, depending on company policy or agreements.

Statutory Benefits

The government mandates the following statutory benefits:

• Social Security Contributions:

• Employers contribute 13% of the employee's basic salary to the Social Security and National Insurance Trust (SSNIT).

• Employees contribute 5.5% of their salary.

• These contributions provide retirement, disability, and survivor benefits.

• Health Insurance:

• Both employers and employees contribute to Ghana’s National Health Insurance Scheme (NHIS), which offers access to subsidized healthcare services.

Supplemental Benefits

Many employers provide additional benefits to attract and retain talent, such as:

• Private Health Insurance: Enhanced medical coverage beyond what is provided by the NHIS.
• Housing or Transportation Allowances: Financial support for accommodation or commuting costs.
• Professional Development: Funding for employee training, certifications, or tuition reimbursement.
• Flexible Leave Policies: Additional paid time off or personal leave beyond statutory requirements.

Process

• The termination process is governed by the terms of the employment contract and any applicable collective agreements.
• Either the employer or employee can terminate the contract by providing written notice.
• If an employee believes the termination was unfair, they can file a claim with the labor court.

Notice Period

The required notice period is based on the length of employment:

• 0–3 years: 14 days' notice.
• 3+ years: 30 days' notice.

Severance Pay

• Ghanaian labor laws do not mandate severance payments for terminations without cause.
• Employees are entitled to receive their standard wages during the notice period.

Additional Consideration

1. Termination Without Cause: Under Ghanaian law, both employers and employees can terminate employment without providing a reason, provided they give appropriate notice or pay in lieu of notice. This aligns with the findings from the Supreme Court decision discussed in your search results, which clarifies that termination can occur without justification unless specified otherwise in the employment contract.

2. Dismissal vs. Termination: It’s important to distinguish between dismissal (which requires just cause) and termination (which can occur without cause). The Labor Act outlines specific situations where dismissal is considered fair, such as misconduct or incompetence.

3. Legal Protections: Employees are protected against unfair termination based on discriminatory reasons (e.g., gender, race, union membership). If an employee feels their termination was unjust, they have recourse through labor courts.