The Laws Governing Redundancy And Termination Of Employment In Ghana

Labour Act, 2003, Act 651 gives an insight on termination of employment and redundancy.

Termination of Employment

Under Act 651, a contract of employment may be terminated by either party at any time. However, where the contract of employment is for three (3) years or more, it may be terminated upon a month’s notice or a month’s pay in lieu of notice. Where the contract of employment is less than three years, two weeks’ notice or two weeks’ pay in lieu of notice is required. In the case of contract from week to week, seven days’ notice is required to be given to the employee. In the event that the contract of employment is determinable at will by either party, it may be terminated at the close of any day without notice.

Under the law however, termination maybe deemed to be unfair where the termination is only by reason of the fact that the worker intends to join a trade union or has ceased to join a trade union; that the worker has participated in proceedings against the employer: of race, colour, religion; or in the case of a pregnant woman as a result of the pregnancy or absence of work on maternity leave; that the worker has a disability; that the worker has refused to perform duties normally required of him as a result of a lawful strike among others .Additionally, a worker’s termination would be deemed unfair where it is as a result of ill-treatment of the worker by the employer or where the employer has failed to take action on repeated complaints of sexual harassment of the worker at the workplace.

Remedies for Unfair Termination

Where a worker is aggrieved by the termination of his employment by his Employer, he may lodge a complaint with the Labour Commission. The Labour Commission upon making a determination that the termination is unfair may order that the worker be reinstated as at the date of termination; order the employer o re-employ the worker either in the work he was employed prior to the termination or a reasonably suitable work on the same terms and conditions as his previous employment or pay compensation to the worker.

Remuneration upon Termination

According to the law, a worker or employee is entitled to be paid any remuneration owed him before the termination, any deferred payments owed him before termination, as well as any compensation due to the worker as a result of sickness or an accident. For a foreign employee, the law requires the employer to pay all expenses and necessaries for the journey and repatriation expenses in respect of the worker and accompanying members of his or her family in addition to any or all of the payments owed to the employee. However, where notice of termination is required, the employer is to pay the worker the next day after termination.


The law provides that where an employer contemplates that the introduction of major changes in production, programme, organization, structure or technology of an undertaking that are likely to entail terminations of employment of workers in the undertaking, that employer is mandated under Act 651 to submit in writing to the Chief Labour Officer, all relevant information including the reasons for any termination, the number and categories of workers likely to be affected and the period within which any termination is to be carried out; as well as to consult the trade union concerned on measures to be taken to avert or minimize the termination as well as measures to mitigate the adverse effects of any terminations on the workers concerned such as finding alternative employment.

Additionally, where an employment is closed down or undergoes an amalgamation and that arrangement is likely to sever relationships between a worker and an employer immediately before the close down and this is likely to result in the worker being unemployed or suffering a diminution in the terms and conditions of employment, that worker is entitled to be paid compensation which is known as the redundancy pay.

The amount of compensation or redundancy pay is subject to negotiation between the employer and the worker on the one hand and the trade union or the worker on the other hand. Any dispute arising from the amount of redundancy pay and the terms and conditions of the payment may be referred to the Labour Commission and the decision of the Labour Commission shall be final.

AUTHOR: AB Lexmall & Associates

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