Hiring Guide: Key Intel to know before Hiring Ghana Employees

One of Africa’s more politically stable countries, Ghana has enjoyed stable economic growth in the last few decades. With an annual GDP of $77.59 billion in 2021, the country ranks 8th on the GDP rankings of African countries. Over the past decade, Ghana’s economy has expanded at an average annual rate of around 7%, making it one of the fastest-growing economies on the continent.

Several factors, including stable macroeconomic policies, increased foreign investment, and a growing domestic market, have driven the country’s economic growth. Ghana has also made progress in reducing poverty, improving access to education and healthcare, and expanding its infrastructure. Due to such progress in most sectors, Ghana’s unemployment rate has decreased from 10.5% in 2000 to 3.9% in 2021.

Despite challenges such as high debt levels and persistent inequality, Ghana’s economic growth offers promising opportunities for domestic and foreign businesses looking to invest in the country. As a result, an increasing number of businesses are looking to tap into the Ghanaian workforce to hire employees for their companies.

The government also has easy laws and financial schemes that help companies in recruitment and selection in Ghana. Read on to learn more about how to hire in Ghana.

Things to Know Before Hiring in Ghana

With a relatively high annual GDP growth rate of 5.4% (2021), various companies have taken steps for recruitment and selection in Ghana. However, before you start to hire employees in Ghana, there are certain things you should be mindful of:

Languages spoken

• The official language of Ghana is English.
• All contracts and agreements are generally drafted in the official language of English.
• The country has around 80 indigenous languages with different dialects.
• Akan and Dagbeni are two of the more widely spoken native languages in the country.
• Due to Ghana being surrounded by old French colonies, there is a small French-speaking population within the country.

Employee contract

While there are provisions for oral contracts to be acknowledged by Ghanaian laws, it is advisable to have written contracts. The Ghanaian Labour Act, 2003 (ACT 651) states that any employee working for six months or days equivalent to six months must receive valid written contracts from the employee. However, the law also recognizes oral contracts for employment duration that is less than six months.

Learning about the employment contract details is an integral part of the hiring process in Ghana. There are some basic terms and conditions that employee contracts must outline the following:

• The name and the details of both the employee and the employer.
• The date of joining the job must be mentioned.
• If the contract is for a set period, the employer must include that duration.
• Office guidelines, including the dos and don’ts of the workplace
• Internal regulations and restrictions should be part of the contract.
• Job description which clearly outlines the duties and responsibilities of the worker
• Working hours and breaks
• Number of holidays, additional leaves, and paid time off
• Details of the basic salary, additional perks, benefits, and payment process
• Duration of the probation period (usually between 90 to 180 days)
• Employers must also add details about social security contributions and pension schemes, irrespective of public or private sector work.

Working hours

• Ghanaian labor laws mandate the maximum daily working hours to be eight.
• The weekly working hours should be at most 40 hours in all cases.
• If someone works less than eight hours a day, the company may ask the employer to stay back for additional hours in the following days. However, this proportionately longer working hour can be at most nine hours daily.
• Regarding seasonal jobs requiring extended work hours, the total number of work hours per year should be at most eight hours per day on average, unless labor laws allow a maximum of 10 hours per day.

Breaks

• Employees get a rest period of at least 30 minutes for a full day’s continuous work, which is counted as part of their typical working hours. 
• However, if the standard work hours have been divided into two segments, the break should be at least an hour. In this case, this break is separate from their regular working hours. 
• Additionally, the employer has to give employees 12 hours of rest between consecutive working days.
• Employers must allow a weekly rest period of two days or 48 consecutive hours within a standard working week.

Overtime

• Like most countries, overtime in Ghana is considered any working hour exceeding the daily and weekly restrictions.
• If hiring employees in Ghana, you must remember that you can only make them work overtime if your company has an overtime pay structure.
• While there is no fixed rate of overtime payment, the current overtime pay stands at 150% of the salary on weekdays and 200% on weekends.

Annual leave

• Ghana labor laws allow employees to take 15 days of paid leave annually.
• The country has 13 national holidays:
  • New Year’s Day
  • Constitution Day (7th January)
  • Independence Day (6th March)
  • May Day
  • Founder’s Day (4th August)
  • Kwame Nkrumah Memorial Day (21st September)
  • Farmer’s Day (2nd December)
  • Christmas Day
  • Boxing Day
  • Eid-Ul-Fitr
  • Eid-Ul-Adha
  • Good Friday
  • Easter Monday
• There are no provisions for sick leave as per Ghanaian labor laws. Companies enjoy the freedom to decide whether to allow paid sick leave.

Maternity leave

• According to Ghanaian regulations, the mother gets 12 weeks of fully paid maternity leave.
• In the event of a difficult birth or if more than one child is born, the mother gets an additional two weeks off at a 100% pay rate.
• The company has the leeway to assign more additional leaves for exceptional cases.
• After the end of the maternity leave, when the mother returns to work, she is entitled to have a daily hour off work to nurse her newborn child. This daily nursing leave continues until the child turns one.

Other leaves

• Unfortunately, Ghana does not have special parental or paternity leave provisions.
• Employers also do not have any compulsion to give employees marriage or bereavement leaves.
• Employees can negotiate various leaves into the employment contract during recruitment and selection in Ghana.

Payroll & salary

• The employees in Ghana are generally paid on a monthly basis.
• After hiring in Ghana, employers must ensure employees receive monthly payments on the same day. A payment day for a month should be before the last working day for that month.
• The employers add different types of allowances to the employee salary:
  • Night shift allowance
  • Domestic help allowance
  • Child education allowance
  • Transport allowance
  • Accommodation or rent allowance
• There is a system of minimum wage in Ghana. Effective January 2023, the minimum wage increased from 13.53 Ghanaian cedis (GHS) to 14.88 Ghanaian cedis (GHS).
• While no laws mandate severance pay, employers and employees can mutually include such payments in the contract during the hiring process in Ghana.

Taxes

• In Ghana, taxes are levied based on an individual’s income from investments, jobs, or businesses, irrespective of whether that source of income has ceased to exist.
• Income earned from sources inside and outside the country is taxed, meaning Ghana actively taxes foreign-sourced income.
• However, there is an exemption for the employment income of a resident who is employed by a non-resident or resident employer but exercises their employment outside of Ghana. In this case, the individual is only exempt from paying taxes if they are present outside Ghana for more than 183 days.
• On the other hand, non-residents in Ghana are subject to taxes at a flat rate of 25%.
• Employees in Ghana are required to contribute to personal income tax through the Pay As You Earn or PAYE system. Under this system, employers deduct a percentage of an employee’s income, ranging from 0% to 30%, and file it with the tax authorities.
• Ghanaian nationals are taxed based on the following slabs:

• From 2023 onwards, the government has indirectly proposed to put in an additional Pay-As-You-Earn (PAYE) tax band of 35%.
• Regarding bonus payments in Ghana, employers must pay taxes on any bonuses paid to employees during the fiscal year. 
• The tax rate for bonuses ranges from 5% to 15% of the employee’s annual basic income. 
• If the bonus payment exceeds 15%, the excess amount is added to the employee’s earnings and taxed at graduated rates.

Social security contributions

• When you hire in Ghana, Ghana’s social security contribution scheme is essential. It is divided into three tiers, with the first two being mandatory and the third being voluntary. 
• The employee and the employer contribute to the first two tiers, with the employee contributing 5.5% and the employer contributing 13%. 
• Of the total contribution of 18.5%, 13.5% is contributed to the first tier scheme, and the remaining 5% to the second tier scheme. These contributions are tax-deductible and tax-free for both the employer and the employee.
• Under the third tier, there are no restrictions on the contributions that can be made to the fund. 
• However, contributions made by an employer and employee of up to 16.5% are exempt from tax for both parties. 
• Contributions exceeding 16.5% are taxable on the employee, the employer, or both.

Employment termination

• The labor laws in Ghana state that an employment contract can be terminated at any point, either mutually or by the employer or the employee.
• It is mandated by law to give the termination notice in writing.
• Employment termination can be due to a variety of reasons:
  • Gross misconduct in the workplace
  • Redundancy
  • Underperformance
  • Legal restrictions on the employee
• It is best to give a written notice a week or a month before resignation.
• If the employee is unhappy with the termination, they can present the termination case before the Ghanaian labor court.
• Companies may have to reinstate employees to their positions if the court decides that there was wrongful termination or the employee was discriminated against.

Notice period

• The notice periods in Ghana depend on employment duration:

• If employers have an “at will” termination clause inserted into the contract, employees can be fired in writing before the end of a working day. Employees can also exercise the “at will” clause.
• There are provisions to pay employees a month’s salary as an alternative to serving the month-long notice period. This type of termination is called “payment in lieu of notice” or PILON.

The Cost of Hiring an Employee in Ghana

Several costs are directly related to hiring employees in Ghana.

• Cost of posting job advertisements
• Legal consultation costs
• Costs incurred from employee background checks
• HR team expenses
• Travel allowances
• Training costs
• Annual salary and benefits
• Tax and social security contributions

What Does a Company Need to Hire Employees in Ghana?

Companies that want to hire in Ghana must have a local legal entity. They can also hire an Employee of Record (EOR) to start the hiring process in Ghana. Forming subsidiaries can also be the way to start hiring in Ghana. However, all such company formations and EOR partnerships must comply with Ghanaian laws and regulations.

Additionally, there are a few other requirements companies should keep in mind before recruitment and selection in Ghana:

• The minimum age of working is 16 years old.
• Children above 13 years are eligible for light work that doesn’t harm their development.
• Only people above 18 are allowed to do hazardous jobs.
• Companies should also apply for the required licenses and work permits before hiring in Ghana.

Various Options for Hiring Employees in Ghana

There are two primary options to start recruitment and selection in Ghana:

Owning a legal entity

Companies can start their businesses in Ghana to hire Ghanaian workers. International companies comply with all the legal requirements to start their own business through this option. Once the company has been registered, it is free to hire employees in Ghana, depending on vacant posts. 

However, registering a company in a foreign company can take time and effort. Furthermore, the entire process can be tedious and run into bureaucratic red tape.

Hiring an EOR

Creating a legal entity can be costly and time-consuming, so many companies use an Employer of Record (EOR) instead. An EOR in Ghana provides businesses with a practical solution for hiring and employing workers. By partnering with an EOR, companies can outsource the responsibility of ensuring compliance with local employment laws and managing various HR functions such as onboarding, payroll, and benefits.

Using an EOR can offer several benefits to companies looking to expand their workforce in Ghana. It can save time and resources, allowing companies to focus on their core business activities.

The Steps to Hiring in Ghana

You can start to hire staff in Ghana by following these easy steps:

Step 1: Establishing a presence

First and foremost, it is crucial to establish a company presence before you start to hire in Ghana. This can be done by setting up a subsidiary company, registering it with the concerned authorities or teaming up with an EOR in the country.

Step 2: Putting up job adverts

Creating a job advertisement and posting it in strategic locations is essential to attract potential candidates for a job. This is a critical step in the recruitment process and can significantly impact the quality and quantity of applicants that apply for the position.

In Ghana, national newspapers have been the conventional way of posting job adverts. However, Ghana has already caught up with the technological boom worldwide, with online job adverts a significant way to fill vacancies. Job sites like JobbermanGhana, JobwebGhana, and Glassdoor attract thousands of people searching for jobs.

Social media also plays an influential role in hiring. Posting hiring ads on Facebook, Instagram, etc., can increase the reach, attracting a larger pool of potential candidates to select from.

Step 3: Screening of applicants

Once enough CVs have been submitted for the vacant position, companies can begin screening the applicants to identify the most suitable candidates. The hiring managers or an Employer of Record (EOR) in Ghana typically carry out this process.

As part of the screening process, background and credit checks are often conducted to ensure that candidates meet the necessary qualifications and have a good track record. 

Step 4: Calling applicants for interviews

Candidates are called for interviews after suitable applicants have been selected. Such interviews can be conducted online, offline, or via telephonic conversations. During interviews, employers gain a deeper understanding of a candidate’s professional and educational experience. Asking relevant questions allows employers to assess candidates’ skills, qualifications, and overall suitability.

Step 5: Selecting suitable applicants

After the interview process has been conducted, the company or the EOR will select the most suitable applicants. Consequently, contracts will be negotiated, and the selected applicants will receive offer letters.

Step 6: Onboarding

To complete the hiring process in Ghana, once the employment contract is signed and all the necessary paperwork is completed, the company can begin onboarding the new employee. Employee onboarding is the final step of recruitment and selection in Ghana. 

Let Multiplier be Your EOR Platform in Ghana

Multiplier provides a comprehensive system to recruit top talent in Ghana, along with efficient payroll management services and simplified procedures for obtaining work permits. With our all-in-one platform, businesses save time and reduce costs, allowing them to concentrate on expanding their operations. Therefore, think Multiplier if you want to hire in Ghana.