Key Innovations in the Draft Labour Bill, 2025
LABOUR LAW REFORM IN GHANA
Episode 3 (Termination of Employment)
Termination of Employment
3.1 Introduction
Termination of employment has long occupied a contested space in Ghanaian labour law, shaped not only by statute but also by evolving judicial interpretation. Over the years, a line of reasoning has emerged in practice suggesting that an employer may lawfully terminate a contract of employment without assigning any reason, provided the employer complies with notice requirements or pays salary in lieu of notice.
This approach, while convenient in contractual terms, has generated sustained debate among labour lawyers, judges, and industrial relations practitioners, particularly when examined against international labour standards.
At the international level, ILO Convention No. 158 (Termination of Employment Convention, 1982) establishes a clear normative principle:
A worker’s employment shall not be terminated unless there is a valid reason connected with the worker’s capacity, conduct, or the operational requirements of the undertaking.
Although Ghana has not ratified Convention No. 158, its principles have long informed progressive labour law reform and jurisprudence across many jurisdictions, and have influenced how fairness in termination is understood globally.
It is within this contested legal space that the Draft Labour Bill, 2025 intervenes. Rather than perpetuating ambiguity between contractual discretion and substantive fairness, the Bill moves decisively toward a valid-reason-based termination regime, anchoring termination firmly in defined statutory grounds and procedural due process.
Episode 3 examines how the Draft Labour Bill, 2025 responds to this historical tension, and how it repositions termination of employment from a purely contractual act to a regulated legal process grounded in fairness, predictability, and accountability.
Question
Can an employer lawfully terminate employment without assigning any reason?
This introduction to Episode 3 of my Labour Law Reform series sets out the tension between practice, jurisprudence, and international labour standards.
3.2 Termination under the Labour Act, 2003 (Act 651)
Termination of employment under the Labour Act, 2003 (Act 651) is recognised as either fair or unfair, depending on the reason and circumstances.
Act 651 provides that termination may be fair where it is based on incompetence, proven misconduct, redundancy, or legal restriction. It further identifies unfair termination where dismissal is occasioned by prohibited grounds such as trade union activity, discrimination, pregnancy, disability, illness, or participation in lawful industrial action.
Act 651 also recognises a limited form of constructive termination, allowing a worker who resigns due to ill-treatment or an employer’s failure to act on repeated complaints of sexual harassment to pursue an unfair termination claim.
However, the Act largely operates after termination has occurred. It offers limited statutory guidance on what constitutes incompetence or misconduct, and provides little clarity on the procedural steps that should precede termination. Much is therefore left to interpretation by the National Labour Commission and the Courts.
3.3 A Structural Shift in the Draft Labour Bill, 2025
The Draft Labour Bill, 2025 introduces a clear structural shift. At its core is the principle that:
A contract of employment shall not be terminated except as provided for under the Act.
This provision closes informal and discretionary exit routes and anchors termination squarely within statute.
3.4 Clearly Defined Grounds for Termination
The Bill expressly codifies permissible grounds for termination, including:
a. Mutual agreement
b. Proven incompetence
c. Proven misconduct
d. Redundancy
e. Prolonged incapacity due to sickness or accident
f. Death of the worker
g. Termination by the worker on grounds of workplace violence or harassment, including sexual harassment
Most importantly, the Bill specifies the permissible grounds for termination and sets clear requirements for how those grounds must be established. Incompetence must be demonstrated through performance assessment processes, while misconduct must follow a disciplinary procedure grounded in fairness and established workplace rules.
3.5 Expanded Constructive Protection
While Act 651 links constructive termination narrowly to ill-treatment or unresolved sexual harassment, the Draft Labour Bill broadens protection significantly. A worker who resigns due to any form of workplace violence or harassment is deemed to have been unfairly terminated.
This aligns termination law with the Bill’s broader dignity-at-work framework.
3.6 Notice and Payment Obligations
The Bill standardises notice periods according to contract duration and expressly allows termination without notice where payment in lieu of notice is made. This removes uncertainty and harmonises practice across sectors.
3.7 Dismissal and Procedural Fairness
A major innovation of the Bill is the explicit regulation of dismissal. Before dismissal, the employer must:
a. Have a valid reason
b. Provide a fair hearing
c. Allow representation
d. Issue a written decision
e State reasons and appeal rights
This embeds natural justice directly into statute.
3.8 Remedies and Compensation
Both Act 651 and the Draft Labour Bill provide remedies of reinstatement, re-employment, or compensation. The Bill enhances certainty by structuring compensation in a more predictable and transparent manner.
3.9 Key take away
Whereas Act 651 corrects unfair termination after the fact,
The Draft Labour Bill, 2025 prevents unfair termination before it occurs.
3.10 Conclusion
The Draft Labour Bill, 2025 does not weaken legitimate managerial authority. Rather, it disciplines and civilises the exercise of that authority by ensuring that termination decisions are grounded in valid reasons, fair procedures, and the rule of law.
By so doing, it strengthens industrial harmony, reduces disputes, and aligns Ghana’s labor regime with contemporary international labor principles.
Kenneth K. Koomson
Member, Labour Bill Drafting Committee