Gratuity Payment Form (Ghana)

A Gratuity Payment Form in Ghana is an official employer document that calculates, records, and authorises payment of end-of-service gratuity to an employee whose contract has been terminated, who has retired, or who has completed a fixed term of employment. The Gratuity Payment Form (Ghana) derives its legal basis from Section 63 of the Labour Act, 2003 (Act 651), which entitles qualifying workers to a gratuity upon the termination of their employment after continuous service with the same employer.

Under Section 63 of the Labour Act 2003 (Act 651), every worker in Ghana who has been in continuous employment with the same employer for a period of not less than three years is entitled to receive a gratuity on the termination of that employment. The gratuity is calculated as a percentage of the worker's annual basic salary for each completed year of continuous service. The rate applied in most formal employment contracts in Ghana is 15% to 25% of basic annual salary per year of service, though many collective bargaining agreements (CBAs) negotiated with the Trades Union Congress (TUC) of Ghana specify higher rates for unionised workers.

The Income Tax Act, 2015 (Act 896) governs the taxation of gratuity payments in Ghana. The Ghana Revenue Authority (GRA) treats gratuity as an employment income subject to PAYE deductions, though the Income Tax (Amendment) Act 2016 introduced an exemption threshold on terminal benefits. Employers are required to deduct the applicable income tax from the gratuity before disbursing the net amount to the departing employee and must remit the deducted tax to the GRA within 15 days of the following month.

A Gratuity Payment Form in Ghana must be distinguished from a redundancy payment under Section 65 of Act 651, which arises specifically when an employee is dismissed due to economic redundancy, and from a severance agreement, which is a negotiated settlement of all claims between employer and employee. The gratuity is a statutory entitlement tied to years of service, whereas redundancy pay is triggered only by the specific ground of economic dismissal. Both obligations may coexist if an employee with three or more years of service is made redundant in Ghana.

The Social Security and National Insurance Trust (SSNIT) does not treat gratuity payments as part of the pensionable emoluments for the purposes of Tier 1 SSNIT contributions under the National Pensions Act, 2008 (Act 766), because gratuity is a terminal benefit rather than regular remuneration. However, the National Pensions Regulatory Authority (NPRA) requires that Tier 2 occupational pension fund balances be settled separately at the point of termination. Employers in Ghana should confirm the Gratuity Payment Form is completed and retained as part of the employee's personnel file, as the National Labour Commission (NLC) and the Labour Division of the High Court of Ghana may require documentary evidence of gratuity payment in any subsequent employment dispute.

The legal framework for the Gratuity Payment Form (Ghana) draws on: Section 63 of the Labour Act, 2003 (Act 651); the Income Tax Act, 2015 (Act 896) as administered by the Ghana Revenue Authority (GRA); the National Pensions Act, 2008 (Act 766) as regulated by the National Pensions Regulatory Authority (NPRA); and relevant collective bargaining agreements (CBAs) registered with the National Labour Commission (NLC). Forms-legal.com provides this template as a starting point for Ghana-compliant documentation.

A Gratuity Payment Form in Ghana is required in the following specific circumstances under the Labour Act, 2003 (Act 651) and related employment legislation.

A Gratuity Payment Form is needed when an employee who has completed three or more years of continuous service with the same employer in Ghana has their contract terminated by the employer, whether for redundancy under Section 65 of Act 651, for reasons of poor performance following a fair process, or at the natural expiry of a fixed-term contract. Without a completed form, the employer lacks documentation to show the gratuity calculation was made correctly and in compliance with Section 63 of Act 651.

A Gratuity Payment Form is required when an employee in Ghana voluntarily resigns after three or more years of continuous service, where the employment contract or a collective bargaining agreement registered with the National Labour Commission (NLC) expressly provides for gratuity on resignation. In the absence of contractual provision, the statutory right under Section 63 applies only to employer-initiated terminations.

A Gratuity Payment Form is needed when a senior executive at a company registered with the Office of the Registrar of Companies (ORC) under the Companies Act, 2019 (Act 992) retires upon reaching the agreed retirement age, as the board of directors must formally approve and record the gratuity payment before disbursement.

A Gratuity Payment Form is required in the mining sector in Ghana, where workers employed by companies licensed by the Minerals Commission under the Minerals and Mining Act, 2006 (Act 703) commonly receive gratuity rates above the statutory minimum under sector-specific CBAs negotiated with the Ghana Mine Workers Union (GMWU).

A Gratuity Payment Form is needed for compliance with PAYE obligations to the Ghana Revenue Authority (GRA) under the Income Tax Act, 2015 (Act 896), as the form documents the gross gratuity, applicable tax deduction, and net payment — all of which must be reflected in the employer's monthly PAYE returns filed with the GRA.

Parties in Ghana should prepare a Gratuity Payment Form (Ghana) proactively rather than waiting for a dispute to arise. Courts interpret agreements based on the written terms rather than oral representations. Under the Labour Act 2003 (Act 651), the National Labour Commission (NLC) adjudicates workplace disputes in Ghana. Section 12 of the Labour Act 2003 requires written terms of employment. The National Pensions Act 2008 (Act 766) mandates employer contributions to the Social Security and National Insurance Trust (SSNIT). The Ghana Revenue Authority (GRA) administers PAYE under the Income Tax Act 2015 (Act 896). The Labour Division of the High Court hears employment appeals. Where the transaction involves regulated activities, prior approval from the relevant authority may be required before execution.

A valid Gratuity Payment Form in Ghana under Section 63 of the Labour Act, 2003 (Act 651) must contain the following essential elements to be compliant and defensible before the National Labour Commission (NLC) or the Labour Division of the High Court.

Employee and Employer Details: The full legal names and addresses of both the employer (including company registration number issued by the Office of the Registrar of Companies — ORC — under the Companies Act, 2019 — Act 992) and the departing employee, together with the employee's Ghana Card number (National Identification Authority — NIA) and SSNIT number, are required for accurate identification and tax reporting to the Ghana Revenue Authority (GRA).

Employment Period: The precise commencement date and termination date of employment, and the total years and months of continuous service computed from those dates. Section 63 of the Labour Act, 2003 (Act 651) requires a minimum of three completed years of continuous service; part years are typically pro-rated in accordance with the employment contract or the applicable CBA.

Gratuity Rate and Calculation: The applicable gratuity rate (expressed as a percentage of annual basic salary per year of service), the employee's annual basic salary in Ghana Cedis (GHS) at the date of termination, the gross gratuity amount (rate × years × annual salary), and the step-by-step arithmetic used to arrive at the gross figure.

Tax Deduction and Net Payment: The applicable income tax deducted by the employer under the Income Tax Act, 2015 (Act 896) as per the GRA's current graduated tax bands, and the net gratuity payable to the employee after deduction. The employer must remit the deducted tax to the Ghana Revenue Authority within the statutory PAYE deadline.

Separation Details: The ground of termination (redundancy, retirement, fixed-term expiry, voluntary resignation where contractually applicable), the effective date of termination, and a cross-reference to any accompanying redundancy notice or retirement letter.

Payment Method and Date: Confirmation that payment will be made by bank transfer to a Bank of Ghana-licensed institution, specifying the payment date. Gratuity must be paid no later than the effective date of termination or within a reasonable time agreed in the employment contract.

Signatures and Authorisation: The form must be signed by the employee (acknowledging receipt of the calculation), an authorised representative of the employer, and a witness. Execution in Ghana does not require notarisation, but the National Labour Commission (NLC) recommends a witnessed signature for formal employment separations. Forms-legal.com provides this template as a starting point for Ghana-compliant gratuity documentation.

Additional compliance elements for a Gratuity Payment Form (Ghana) used in Ghana include: Under the Labour Act 2003 (Act 651), the National Labour Commission (NLC) adjudicates workplace disputes in Ghana. Section 12 of the Labour Act 2003 requires written terms of employment. The National Pensions Act 2008 (Act 766) mandates employer contributions to the Social Security and National Insurance Trust (SSNIT). The Ghana Revenue Authority (GRA) administers PAYE under the Income Tax Act 2015 (Act 896). The Labour Division of the High Court hears employment appeals. Forms-legal.com provides this template as a starting point for Ghana-compliant documentation.