Employment Termination Letter (Ghana)

An Employment Termination Letter in Ghana establishes the conditions of employment, covering role, compensation, leave and notice of termination. It defines duties, remuneration, working hours, leave, and termination procedures binding employer and employee.

Section 63 of the Labour Act 2003 (Act 651) governs termination of employment by an employer and specifies the minimum notice periods that an employer must give an employee before terminating employment. The notice periods under Section 63 of Act 651 are: one week's notice for employees employed on a daily or weekly basis; two weeks' notice for employees employed for a continuous period of between one and three years; and one month's notice for employees employed for a continuous period exceeding three years. An employer may make payment in lieu of notice instead of requiring the employee to work out the notice period.

The Fair Wages and Salaries Commission Act 2007 (Act 737) and the National Labour Commission Act 2003 (Act 651, Part VI) establish the National Labour Commission (NLC) as the body responsible for mediating and arbitrating labour disputes in Ghana, including disputes about unfair termination of employment. The NLC has the authority to order an employer who has unfairly terminated an employee's employment to reinstate the employee or to pay compensation.

Section 63 of Act 651 also distinguishes between termination with notice (ordinary termination), summary dismissal (termination without notice for serious misconduct), and redundancy (termination due to the abolition of the employee's position). Each type of termination has different procedural requirements and financial consequences. A summary dismissal is only lawful where the employee has committed a serious offence specified in Section 64 of Act 651, such as wilful damage to property, assault, fraud, or gross insubordination. An employer who dismisses an employee summarily without just cause is liable for wrongful dismissal and may be ordered by the High Court (Labour Division) in Accra or the National Labour Commission to pay compensation.

The Internal Revenue Act — now replaced by the Income Tax Act 2015 (Act 896) — and the National Pensions Act 2008 (Act 766) impose obligations on employers regarding the payment of tax and pension contributions up to the date of termination. The Ghana Revenue Authority (GRA) requires employers to account for PAYE (Pay As You Earn) tax on all payments to employees, including notice pay, redundancy pay, and final salary. The Social Security and National Insurance Trust (SSNIT) administers the Tier 1 basic national social security pension under Act 766 and requires employers to make final SSNIT contributions and update the employee's SSNIT record upon termination.

An Employment Termination Letter that complies with the Labour Act 2003 (Act 651) protects the employer from claims of unfair or wrongful dismissal before the National Labour Commission or the High Court (Labour Division) and gives the employee a clear record of the termination date, entitlements, and outstanding payments for use in future employment applications and in any proceedings before the NLC.

An Employment Termination Letter in Ghana is needed whenever an employer intends to end an employee's employment for any reason, whether for cause, on grounds of redundancy, at the end of a fixed-term contract, or by mutual agreement.

An Employment Termination Letter is required when an employer decides to terminate an employee's indefinite contract of employment on grounds of poor performance, misconduct, or the operational needs of the business, and must give the employee the minimum notice period prescribed by Section 63 of the Labour Act 2003 (Act 651).

An Employment Termination Letter is needed when an employer is carrying out a redundancy exercise — reducing its workforce because of economic difficulties, restructuring, or technological change — and must comply with the redundancy procedure in Section 65 of Act 651, which requires prior consultation with workers' representatives and payment of redundancy benefits.

An Employment Termination Letter is required when a fixed-term employment contract expires and the employer does not intend to renew it, even if no separate notice is strictly required by the contract, to provide a clear written record of the end of the employment relationship.

An Employment Termination Letter is needed when an employer is summarily dismissing an employee for serious misconduct — such as theft, fraud, wilful damage to property, gross insubordination, or assault of a colleague — on the grounds specified in Section 64 of the Labour Act 2003 (Act 651), and must provide the employee with written notice of the reasons for the summary dismissal.

An Employment Termination Letter is required when a company incorporated under the Companies Act 2019 (Act 992) is being wound up, restructured, or sold, and the employment of all or some employees must be terminated as a consequence of the corporate transaction, in compliance with Act 651 and in coordination with the National Labour Commission (NLC).

Employers should issue the Employment Termination Letter on or before the date on which notice is given to begin the notice period calculation, retain a signed acknowledgement from the employee if possible, and make all outstanding payments — including final salary, notice pay, annual leave pay, and any redundancy benefit — on or before the final day of employment.

A legally effective Employment Termination Letter in Ghana under the Labour Act 2003 (Act 651) must contain the following essential elements.

Employer Identification: Full legal name of the employer, company registration number issued by the Office of the Registrar of Companies (ORC) under the Companies Act 2019 (Act 992), business address, and the name and title of the signatory authorised by the employer to issue the termination letter.

Employee Identification: Full legal name of the employee, job title, employee number (if applicable), and department. The letter should be addressed directly to the employee by name.

Date of Letter and Date of Termination: The date on which the letter is issued and the date on which the employment ends. The gap between these two dates must be at least the minimum notice period under Section 63 of the Labour Act 2003 (Act 651): one week for employees of less than one year's service, two weeks for one to three years, and one month for more than three years.

Ground for Termination: A clear and honest statement of the reason for termination. The principal categories under Act 651 are: ordinary termination with notice (performance, business reasons, expiry of fixed term); summary dismissal for serious misconduct under Section 64 of Act 651 (in which case the specific act of misconduct must be described); and redundancy under Section 65 of Act 651 (in which case the reason for the redundancy and the selection criteria must be explained).

Notice Period or Payment in Lieu: A statement of the notice period being given (or that notice has been waived and payment in lieu is being made) and the last day of employment. Where payment in lieu of notice is made, the gross amount payable must be stated.

Final Entitlements: A schedule of all payments due to the employee on termination, including: final salary up to the termination date; payment for any accrued but untaken annual leave under Section 20 of Act 651; notice pay or payment in lieu; redundancy benefit (if applicable) under Section 65 of Act 651; and any other contractual entitlements. The Ghana Revenue Authority (GRA) requires PAYE tax to be deducted from all termination payments under the Income Tax Act 2015 (Act 896).

Social Security and Pension: Confirmation that the employer will make final Social Security and National Insurance Trust (SSNIT) contributions covering the period up to the termination date and will update the employee's SSNIT record under the National Pensions Act 2008 (Act 766). The employer should also advise the employee of the procedure for transferring the employee's Tier 2 occupational pension benefit.

Return of Property: A list of employer property — such as keys, access cards, laptops, mobile phones, vehicles, and confidential documents — that the employee must return on or before the last day of employment.

Post-Employment Obligations: A reminder of any post-employment obligations binding on the employee under the employment contract or a separate Non-Disclosure Agreement, such as confidentiality, non-solicitation, or restrictions on joining a competitor. Post-employment restraint of trade clauses are enforceable in Ghana if they are reasonable in scope, duration, and geographical area under Contract Act 1960 (Act 25).

Right to Refer Dispute: A statement informing the employee of the right to refer any dispute about the termination to the National Labour Commission (NLC) under Act 651 or to the High Court (Labour Division) in Accra. Forms-legal.com provides this Employment Termination Letter template as a starting point for employers in Ghana.