Population: (2023 est.) 32,147,000
Monetary Unit: Ghanian Cedi (GH¢, GHS)
Official languages: English (Official), Dagaare, Dagbanli, Dangme, Ewe, Frafra, Ga, Gonja, Nzema, Twi
Ghana, officially known as the Republic of Ghana, is a West African Country. Ghana is divided into 16 regions, and its capital is Accra which is the largest city in Ghana. The official language of Ghana is English, and the currency is the Ghana cedi (GHS). Ghana is a middle-income economy. Service sector, manufacturing and extractive industries are some of its key sectors.
Statutory Labour Requirements
The public holidays in Ghana are as follows;
- 1 Jan New Year’s Day
- 2 Jan New Year Holiday
- 7 Jan Constitution Day
- 9 Jan Constitution Day Holiday
- 6 Mar Independence Day
- 7 Apr Good Friday
- 10 Apr Easter Monday
- 21 Apr Eid al-Fitr
- 1 May May Day
- 25 May Africa Unity Day
- 28 Jun Eid al-Adha
- 1 Jul Republic Day
- 4 Aug Founders’ Day
- 21 Sep Kwame Nkrumah Memorial Day
- 1 Dec Farmers’ Day
- 25 Dec Christmas Day
- 26 Dec Boxing Day
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.
Employees are generally entitled to at least 15 days of paid annual leave.
Female employees are generally entitled to 12 weeks of paid maternity leave.
There is no statutory paternity leave
: There is no specific time for sick leave given in the labor code.
A worker is entitled to compensation known as redundancy pay when an employment is closed 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. The employer and the employee, on the one hand, and the trade union or the employee, on the other side, negotiate the amount of compensation or redundancy pay.
13th / 14th Month Pay: There is no statutory requirement to pay the 13th or 14th month salary, however employees may receive fringe benefits.
A work permit is a permission given by the Ghana Immigration Service (GIS) to employ foreign nationals, outlining the quantity and type of workers that are allowed to be engaged. The typical duration of a work visa in Ghana is one year, while there are some exceptional circumstances when it may be valid for six months. A declaration stating that the holder is only allowed to engage in the specific employment, business, or professional occupation listed in the work permit is included with the employer’s name on the work permit. Usually, a work permit is granted first, followed by a residence permit. The Ghana Immigration Service must receive a formal application on behalf of the employee.
Act 651 of the Labour Act 2003 permits either party to end a contract of employment at any time. A month’s notice or a month’s pay in lieu of notice may be given to end an employment agreement if it has been in place for three (3) years or longer. Two weeks’ notice or two weeks’ compensation in lieu of notice is necessary when the employment contract is less than three years old. Seven days’ notice must be given to the employee in the case of a week-to-week contract. If either party has the right to cancel the employment agreement at whim, it may be done so immediately at the end of any day.
However, under the law, a dismissal may be considered unfair if it is solely due to a worker’s intention to join or cease membership in a union, participation in legal actions against an employer based on race, color, or religion, or in the case of a pregnant worker due to pregnancy or time away from work for maternity leave, a worker’s disability, or a worker’s refusal to perform duties. A worker’s termination would also be considered unfair if it resulted from the employer mistreating the employee or if the employer ignored repeated accusations of sexual harassment of the employee at work.
Severance: In Ghana, individual dismissals do not result in severance pay (for non-economic reasons). Compensation is negotiated between the company and the employee when the termination is due to redundancy.
According to the legislation, these benefits are required. These consist of the probationary term, yearly leave, federal holidays, sick leave, maternity leave, overtime pay, notice period, and severance compensation. Social Security payouts are statutory benefits as well.
Ghanaians work 8 hours per day, 5 days per week, making a total of 40 hours a week.
Work performed by a worker in an organization after the regular business hours specified by such rules should be considered overtime. Although they are not set by legislation, overtime rates are often regulated by the applicable collective bargaining agreement or employment contract. Typically, overtime hours are compensated at 150% of the standard hourly rate.
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.
Ghana taxes residents’ income from all jobs, businesses, and investments regardless of whether the source from which the revenue was derived has since ended. Foreign-sourced income is taxable since residents are subject to global income tax. However, if a resident person works outside of Ghana for more than 183 days when employed by a resident employer or a non-resident employer, they are free from paying income taxes on their employment income. Non-residents just pay a fixed 25% tax rate. Residents are subject to tax at rates ranging from 0% to 30% on the annual graduated income distribution as follows:
First 3,828 = 0%
Next 1,200 = 5%
Next 1,440 = 10%
Next 36,000 = 17.5%
Next 197,532 = 25%
Above 240,000 = 30%
Three tiers make up the social security contribution system. The first two require contributions, while the last one is optional.
In the first two tiers, the employee is expected to make a 5.5% contribution while the employer makes a 13% contribution. A total of 18.5% is donated, with 13.5% going to the first tier and 5% to the second-tier schemes. These donations are both tax-deductible and tax-free for the company and the employee.
No restrictions apply to fund donations made under the third tier. However, up to 16.5% of donations made to an authorised fund manager by an employer and employee are exempt from taxation on the part of the employer and employee. Any contributions that are higher than 16.5% are taxed either to the employee, the employer, or both.
Unless excluded, expatriates must pay into the compulsory social security programs. However, foreign workers employed by contractors and subcontractors (of the upstream petroleum industry) are not compelled to take part in any insurance, compensation, or other employee or social benefit programs established in Ghana.
Personal Deductions: Apart from social security contributions, qualifying insurance premiums, and donations, no non-business expenses are deductible, and no standard deductions are allowed.
Personal Allowances: The tax-free annual threshold is GHS 3,828. In addition, annual reliefs for individuals are provided as follows:
- An individual with a dependent spouse or at least two dependent children – 1,200
- Disabled Person(s) – 25% of Y*
- Aged 60 or more – 1,500
- Dependent Child or Ward Education – 600 per dependent (limited to 3 dependents) **
- Aged Dependents (Over 60 Years) – 1,000 per dependent (up to 2 dependents) **
- Professional, technical, or vocational training cost – Up to 1,000
Where Y* is assessable income from any business or employment.
** Where more than one person qualifies in respect of the same dependent, only one person can claim relief.
Business Deductions: Expenses of a private or domestic nature are generally not deductible. For all individuals other than employees, all outgoings and expenses incurred wholly, exclusively, and necessarily in the production of the income that are subject to tax are deductible. These include the following:
- Interest on money borrowed and employed in acquiring assets used during the year and debt that was also incurred in the production of income.
- For trading stock of the business, an allowance is calculated in a specified manner.
- Rent payable on land or buildings occupied for the purpose of acquiring the income.
- Repairs and maintenance expenses for depreciable assets that are incurred in the production of income may be deducted. The amount deducted should not exceed 5% of the written down value of the pool at the end of the year; and is allowed in the order in which the expenses are incurred.
- Research and development (R&D) expenses, irrespective of whether the expense is of a capital nature
- Capital allowance
In Ghana, VAT of 12.5% is charged on every supply of goods and services made in Ghana, except for goods and services exempted. Value Added Tax at the same rate is equally charged on every importation of goods. If a retailer is registered for VAT and makes annual supplies of between GHC 200,000 and GHC 500,000, all tangible items (other than exempt goods) are liable to VAT at the flat rate of 3%. These suppliers’ input VAT expenses are not tax deductible.
It is a tax which is deducted at source by a withholding agent (a person required to deduct tax) when making payment to another person and accounted for later to the GRA. The WHT rates on various types of payments are as follows (the tax is a final tax for non-residents and the rate may be reduced under an applicable tax treaty)
- Dividends – 8%
- Interest – 0%/8%
- Royalties – 15%
- Management/Professional – 7.5%
- Rental Payments – 8%/15%
- Dividends – 8%
- Interest – 8%
- Royalties – 15%
- Management/Professional – 20%
- Rental Payments – 15%