Definitive Guide to Hiring in Ghana

Hiring in Ghana

Hiring employees compliantly in Ghana means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Ghana so that you don’t run afoul of employment laws. To hire an employee compliantly and offer them mandatory benefits and compliant agreements, you can:

(a) Establish your own new legal entity, banking, accounting and payroll service in Ghana; or

(b) use an Employer of Record like Global Expansion who can handle all of the details for you.

Labor Laws in Ghana

Employee Probation Period

• Probation period is not outlined in the law, except for that that it should be reasonable.
• In general, probation periods are agreed upon in collective agreements.

Annual Leave in Ghana

• Employees are generally entitled to at least 15 days of paid annual leave.

Holidays in Ghana

Maternity Leave Ghana

• Female employees are generally entitled to 12 weeks of paid maternity leave.

Paternity Leave Ghana

• There is no statutory paternity leave

Sick Leave in Ghana

• There is no specific time period for sick leave given in the labor code.

Working Hours in Ghana

• In general, Ghanaians work an 8-hour day, 5 days per week.

Overtime in Ghana

• A worker may not be required to perform overtime work, exceeding normal working hours, unless that undertaking has fixed rates of pay for overtime work.
• However, the law does not fix the rate of overtime remuneration.
• Overtime hours are usually paid at 150% of the normal hourly wage rate.

Termination of Employment in Ghana

• 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, color, 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.

Notice Period in Ghana

• Weekly workers are entitled to 7 days’ notice; workers on a contract of less than 3 years are entitled to 2 weeks’ notice.
• Workers with longer contracts are entitled to 1 months’ notice.

Severance in Ghana

• 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

Ghana Salary and Wages

13th / 14th Month Pay

• No
• There is no statutory requirement to pay the 13th or 14th month salary.
• However employees may receive fringe benefits.

• The social security contribution scheme is structured into three tiers.
• The first two requires mandatory contributions; however, the last one is voluntary.
• Under the first two tiers, the employee is required to contribute 5.5% while the employer contributes 13%.
• Of the total contribution of 18.5%, 13.5% is contributed to the first tier and 5% to the second tier schemes.
• These contributions are deductible for tax purposes and are tax free for both the employer and the employee.
• Under the third tier, there are no restrictions on the contributions made to the fund.
• However, contributions made by an employer and employee of up to 16.5% are exempt from tax on both the employer and the employee to the extent of their respective contributions to an approved fund manager.
• All contributions in excess of 16.5% are taxable on the employee or employer or both.
• Expatriates, unless exempt, are required to contribute to the mandatory social security schemes.
• However, expatriate employees of contractors and sub-contractors (of the upstream petroleum industry) are not required to participate in any insurance, compensation, or other employee or social benefit programs established in Ghana.

Immigration Ghana

• A work permit is an approval granted by the Ghana Immigration Service (GIS) for the employment of foreign nationals specifying the number and description of persons authorized to be employed.
• A Ghana work permit is usually valid for 1 year and in some special cases 6 months.
• The work permit specifies the name of the employer and a statement indicating that the holder is only permitted to engage in the particular employment, business or professional occupation specified in the work permit.
• A Residence Permit is usually obtained after the grant of a work permit.
• A formal application must be made on behalf of the employee to the Ghana Immigration Service.

Value Added Tax (VAT) in Ghana

• Other than exempt goods and services, VAT of 12.5% is charged on the following:
  • Every supply of goods and services made in Ghana.
  • Every importation of goods.
• The supply of tangible goods by VAT-registered wholesalers and retailers is subject to VAT at the flat rate of 3%.
• An exemption applies for the supply of any form of power, heat, refrigeration, or ventilation. Input VAT incurred by these suppliers is not deductible.

Mandatory Benefits in Ghana

• These are mandatory benefits as postulated by law
• These include probationary period, annual leave, public holidays, sick leave, maternity leave, overtime pay, notice period, and severance pay
• Statutory benefits also include social security benefits

Payroll Accrual in Ghana

Country Accruals Additional Information

Description

The social security contribution scheme is structured into three tiers. The first two require mandatory contributions; however, the last one is voluntary. Under the first two tiers, the employee is required to contribute 5.5% while the employer contributes 13%. Of the total contribution of 18.5%, 13.5% is contributed to the first tier and 5% to the second tier schemes. These contributions are deductible for tax purposes and are tax free for both the employer and the employee. Under the third tier, there are no restrictions on the contributions made to the fund. However, contributions made by an employer and employee of up to 16.5% are exempt from tax on both the employer and the employee to the extent of their respective contributions to an approved fund manager. All contributions in excess of 16.5% are taxable on the employee or employer or both. Expatriates, unless exempt, are required to contribute to the mandatory social security schemes. However, expatriate employees of contractors and sub-contractors (of the upstream petroleum industry) are not required to participate in any insurance, compensation, or other employee or social benefit programmes established in Ghana.

Payroll Accruals Additional Information

Accrued Benefits in Ghana

Why use Global Expansion to hire in Ghana

Establishing a branch office or subsidiary in Ghana can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Ghana labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Ghana law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into Ghana. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our Ghana Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.