Understanding Employee Benefits and Compensation in Ghana

What are Employee Benefits?

Employee benefits are tangible or intangible compensation offered to employees apart from their regular salaries. The primary purpose of compensation and benefits in Ghana is to attract new talent to the company and retain the existing employees. Some commonly offered benefits in Ghana include leaves, allowances, and health insurance.

Most employee benefits are offered to help them cover the additional expenses they incur while delivering their responsibilities. They aim to take care of the employees’ welfare. The quality of the benefits in Ghana indicates how likely the employees are to stay with a company.  When companies offer great benefits, there are high chances that it would result in a lower turnover rate.

While drafting the benefits and compensation policy in Ghana, companies must stick to all the applicable labor laws. Several collective agreements govern employees’ benefits in Ghana. Companies in Ghana additionally provide supplemental perks to employees. However, these extra perks are entirely the company’s decision.

Compensation Laws in Ghana

Different compensation laws in Ghana oversee the employee benefits that the companies offer. Some of these laws include the following:

• The Labor Act of 2003 of Ghana oversees all the employment and labor concerns in Ghana. 
• Under the Workmen’s Compensation Act, all employees must be covered under the Workmen’s Compensation Insurance. The Workmen’s Compensation Act states that employers must compensate all employees if they encounter a personal injury. 
• Sections 33 to 38 of the Labor Act 2003 also state that the regular working hour in Ghana is 8 hours which translates to 40 hours a week. Any employee working beyond the standard hours is entitled to overtime pay. 
• Act 651 states that either of the two parties can terminate the employment contract at any time. However, if the tenure of employment is more than three years, a month’s notice period or a payment instead of a month’s notice is mandatory. 

How to Develop an Employee Benefits Program for Employees in Ghana?

Considering a few steps before designing a compensation package in Ghana is vital. These steps are as follows:

Step 1: Define your budget and frame your business goals

• Before you start working on employee compensation and benefits in Ghana, you should finalize a budget for the activity. 
• Once you finalize a budget, you should frame the objectives that you want to meet with a benefits plan. 
• While drafting your benefits and compensation policy in Ghana, you should adhere to all the labor laws that govern companies established in the country. 

Step 2: Understand the requirements of the employees

• Employees are the most important stakeholders of any benefits plan. Hence, it is crucial to understand what they expect from a benefits plan. 
• You can conduct an internal survey to get an overview of your employees’ preferences.
• Additionally, you should find out the kinds of benefits that other companies in the industry offer. You can then use these findings to benchmark the benefits you want to offer your employees. 

Step 3: Create a benefits plan

• Once you have all the research findings, you should start creating your company’s benefits and compensation policy in Ghana. 

• While creating a compensation package in Ghana, you must consider all employees’ diverse needs. To meet these diverse needs, you need to keep the plan flexible. 
• You must also chalk out the procedure to avail of the benefits along with their terms and conditions.

Step 4: Get a feedback

• Once the plan’s first draft is ready, you must contact all the stakeholders for their feedback. 
• Try documenting all the feedback so you can analyze them and incorporate them into the benefits plan before releasing it. 
• Feedbacks at this stage are valuable. This is because you can incorporate relevant feedback into the draft.

Step 5: Analyze the plan

• After incorporating the valuable feedback, you must carefully review the entire benefits plan. 
• You must examine every component of the worker’s compensation in Ghana before they are added to the plan. 
• You must ensure that the plan remains relevant even if there are changes in the legal and political environment in which the business operates.
• You must test the plan in different situations to ensure effectiveness.

You must spot all the errors and make the necessary corrections as soon as possible. Once you launch the plan, you must develop a few metrics to check if the employees are availing of the benefits. 

Types of Guaranteed Benefits in Ghana

Let’s discuss some of the mandatory benefits offered by the benefits and compensation policy in Ghana:

Minimum wage

• The minimum wage in Ghana stands at 13.53 per day. Hence, the monthly minimum wage for all the employees in Ghana is 365.31 GHS.

Working hours and overtime

• The standard working hours in Ghana are 40 hours per week, 8 hours per day. 
• There are a few sectors where the working hours can go up to 48 hours per week. However, it is mandated to have a rest period of at least 12 hours between two consecutive working days. 
• If the employees work beyond 40 hours in a week or are asked to work on holidays, they are entitled to overtime pay in Ghana. 
• The worker’s compensation in Ghana for overtime exceeding 40 hours a week is paid at 150% of the regular salary on weekdays and 200% on weekends.

Paid leaves

• Employees are entitled to paid time off once they complete a year with the company.
• The paid leaves offered in Ghana are 15 days a year. 

Public holidays

• Employees in Ghana are entitled to 13 days of public holidays in a year. 
• Following public holidays are offered to the employees in Ghana in  2023:

Sick leaves

• There are no legal requirements in Ghana for sick leaves. However, an employee can take sick leave if certified by a medical practitioner.

Maternity leaves

• All pregnant employees employed in Ghana are entitled to a maternity leave of 12 weeks. 
• The maternity leave period can be extended up to 14 weeks in exceptional cases like multiple, still, or complicated births.
• The maternity leaves are paid at 100% of the regular salaries. 
• Once the employee re-joins work after a maternity break, they are entitled to an hour’s leave during the work day.

Paternity leaves

• There are no provisions for paternity leaves in Ghana. However, a few employers in Ghana offer a few days off as paternity leave.

Parental leaves

• There are no statutory laws governing parental leaves in Ghana. Hence, the offering differs from company to company in Ghana. 

Childcare leave

• Employees are entitled to childcare leaves, and the pay for these leaves is equivalent to the minimum wage. 

Bonus

• Different companies offer different bonus payments to their employees. The payment depends on factors like performance, etc. 
• The tax rate on these bonuses ranges between 5% to 15%. 

Health insurance

• Several medical benefits are offered to employees in Ghana under the National Health Insurance Program. 
• Some popular healthcare services under this insurance policy include outpatient, maternity, and emergency services. 
• All the policies of medical benefits for employees in Ghana are governed by Schedule 2 of Regulation 19 of the National Health Insurance Regulations 2004. 

Employee Benefits for Expatriates

There are a plethora of job opportunities for expats in Ghana. They can either look for a new job or ask for an intra-company transfer. However, the expats must pay taxes as per the income tax slab on their income from Ghana.

During their employment in Ghana, employees are entitled to several benefits, like dental care, health insurance, vision care, family allowance, meal allowance, and fuel allowance. The entitlements of the expat employees also depend on their agreed terms with their employer when they join the company. 

The expat employees should first get their visa to enter the country and then apply for a work permit to find a suitable job in Ghana. 

How are Employee Benefits Taxed in Ghana?

Ghana follows a progressive taxation system where the tax rate depends on the employee’s income level. This  “Pay As You Earn (PAYE)” tax rate ranges from 0% to 30%. However, there have been proposals to put into effect another additional tax band of 35%. The computed value of the perks offered by the employer is included in the total income. The non-cash benefits’ value is calculated based on the market value. 

Also, the employees fund their social security accounts. The contributions made by the employees and the employer towards social security are listed below: 

Restrictions for Ghana Benefits and Compensation

Most incentives and benefits are taxed in Ghana. You must know the value of these perks to calculate the employee’s tax burden. The employer has to ensure that all tax payments are made on time to the government agencies and organizations in charge of employee social security and taxation.

Be sure your company has been officially incorporated and has the necessary business authorizations before establishing a compensation and benefits policy in Ghana. Employers are expected to pay minimum wage. While creating a compensation structure in Ghana, you must consider labor laws. Before providing employee benefits, your organization must also evaluate the benefits plan.

Supplemental Benefits for Employees in Ghana

Ghana offers several supplemental benefits to employees apart from mandatory benefits. Some supplemental benefits include the following:

Adoption leave

While Ghanaian laws do not mandate adoption leaves, generally, employers can provide employees with such leave. However, it must be noted that such leaves can only be granted at the employer’s discretion.

Private health insurance

While the National Health Insurance Program covers several medical expenses, some companies provide additional health insurance from a private insurance provider. The insurance provides them with extra coverage. 

Retirement savings plans

Several employers in Ghana offer retirement savings plans to help employees save for retirement. These plans help the employees in Ghana in securing their future. 

Employee assistance programs

Employers frequently provide employee assistance programs as a perk. If you’re having personal issues, this can assist you in getting access to counseling and other resources.

How Multiplier Can Help with Benefits Management in Ghana

While launching a business, you must choose qualified employees who can advance the enterprise and positively impact the company. Employers must follow local laws and ordinances when creating employment contracts and offering employee benefits. The strategy can be implemented using a global PEO platform like Multiplier.

You have access to skilled experts through Multiplier who are familiar with various business-related challenges. We provide support in complying with labor laws in Ghana, ensuring that you don’t have to establish a subsidiary across the country to manage your workforce effectively. 

Our team of experienced professionals can guide you through the intricacies of operating in a new jurisdiction, making the transition smoother. By leveraging our expertise, you can expand your customer base and optimize labor expenses to boost your business performance.