- March 14, 2021
- Posted by: Admin
- Category: General
This article combines extracts from the Ghana Labour Act, 2003 (Act 651), Ghana National Pensions Act, 2008 (Act 766) and the Ghana Income Tax Act, 2015 (Act 896) which is amended each year.
Minimum Wage / Salary Levels
Minimum wages in Ghana are comparatively low. This is revised each year and takes effect by January the following year. The monthly minimum wage in Ghana for the year 2021 is about GHC 320 (55.75 USD or 46.66 Euro). The daily minimum wage rate is GHC 11.82, which is 2.06 USD or 1.72 Euro. From the Act, the daily wage must be multiplied by 27 days to get the monthly salary. That is GHC 11.82 x 27.
It is important to note that, companies in Ghana don’t pay the minimum wage as this is generally too low. The lowest of salaries range from GHC 500 per month.
Working Hours / Rest Periods
According section 33 of the Labour Act, “the hours of work of a worker shall be a maximum of eight hours a day
or forty hours a week except in cases expressly provided for in this Act“. Therefore, working hours are as follows:
1. Working Hours Per Day: 8am to 5 pm with one hour break.
2. Working Hours Per Week: 40 hours
3. Working Days: Monday to Friday (Saturday and Sunday are rest periods).
The above notwithstanding, overtime work and weekend work are allowed provided overtime rates are fixed. It is also important to note that nursing mothers are allowed extra one hour as resting period.
Overtime Rates and Overtime Work
Section 35 regulates overtime. Overtime applies if a worker works more than 8 hours per day (Mon to Fri) or more than 40 hours per week. The law dictates that, the company must fix an overtime rate before overtime work can take place. Sunday and holiday overtime rates are fixed in the Act at 2.0. However, regular overtime rates are not fixed. The practice is 1.5 as overtime rate from Monday to Friday and/or Saturday.
Holidays and Annual Leave
Holidays in Ghana
The Holidays Act 2001 (Act 601) as amended in 2019 (Act 986) provides for 13 public holidays and statutory public holidays. However, the President by Executive Instrument (EI) can declare any other day as holiday. By convention, the President uses this power where a holiday falls on weekend. In that case, an additional holiday will be given on the next working day.
Annual Leave in Ghana
Annual leave is mandatory and according to the Act, an employer cannot compel an employee to forfeit it. The minimum annual leave per year of service is 15 working days. Companies are at liberty to offer more and this is the practice. Construction companies typically offer 20 working days or more. Senior staff across board get 20 to 35 working days per year as annual leave.
Social Security and Income Tax
Social Security Contributions in Ghana
The Social Security and National Insurance Trust (SSNIT) is a statutory public Trust charged under the National
Pensions Act, 2008 (Act 766) with the administration of Ghana’s Basic National Social Security Scheme. Its
mandate is to cater for the First Tier of the Three-Tier Pension Scheme.
CONTRIBUTIONS
EMPLOYER: 13.0% of basic salary
WORKER: 5.5% of basic salary
TOTAL: 18.5% of basic salary
Income Tax (PAYE) in Ghana
The personal income tax system in Ghana is the graduated type where you Pay As You Earn (PAYE). The rates for each income bracket are reviewed from time to time. The latest can be found at the Ghana Revenue Authority website here.
MONTHLY INCOME TAX RATES APPLICABLE TO RESIDENT INDIVIDUALS
| CHARGEABLE INCOME GH₵ | RATE % | TAX GH₵ | CUMULATIVE CHARGEABLE INCOME GH₵ | CUMULATIVE TAX GH₵ |
| First 319 | Free | Nil | 319.00 | Nil |
| Next 100 | 5 | 5.00 | 419.00 | 5.00 |
| Next 120 | 10 | 12.00 | 539.00 | 17.00 |
| Next 3,000 | 17.5 | 525.00 | 3,539.00 | 542.00 |
| Next 16,461 | 25 | 4,115.25 | 20,000.00 | 4,657.25 |
| Exceeding 20,000 @ | 30% |
In case you need a payroll simulation to get an idea of the applicable social security and tax payments, contact JobHouse Employment Agency for prompt response.
Labour Unions and Associations
Activities or labour unions are allowed under the Labour Act. Workers can join any association at the workplace. Union activities are allowed provided they are not within working hours.
Things that are very important to labour unions in Ghana including: payment for overtime, payment of social security contributions, safe working environment (provision of PPEs where there’s the need) etc.
Labour unions are usually in the following sectors: manufacturing, construction, quarry, mining and extraction.
Employment Contracts, Hiring and Termination
The legal age for employment in Ghana is 18 years and retirement is 60 years.
There are three categories of workers as defined by the Labour Act, namely:
- permanent workers;
- temporary workers; and
- casual workers.
Employment contracts must be offered to employees in continuous employment of at least 6 months.
Where there are no mutually agreed termination provisions, any employment contract can be terminated by giving one month notice or one-month pay in lieu of notice.
Employment of Foreign Nationals (Expats) and Immigration
There are no general restrictions on the employment of foreign nationals in Ghana. However, there are local content laws and transfer of technology regulations which try to make sure locals have a say in some critical sectors such as oil & gas and mining.
Foreign nationals must get work permit before they can work in Ghana. The Ghana Immigration Service handles this process. The processing fee for work permit for non-Ecowas nationals is 1000 USD per year. Other costs such as mandatory health screening and non-citizenship card could take the total cost to about 1500 dollars.
If you need assistance for a seamless and hustle-free visa-on-arrival or work permit/residence permit, contact JobHouse:
Email: admin@jobhouse.com.gh
WhatsApp/Call: +233246750787
Tel: +233302999234.