9 November 2022

Grounds For Termination Of Employment Contract Under The Labour Law Act 2003 (Act 651)

Asare Bediako & Co


Asare Bediako and Co is a law firm in Ghana which places premium on best customer experience to drive client satisfaction. The firm was incorporated to offer and deliver wide range legal services in response to the ever changing and positive economic developments in Ghana, Africa and worldwide. We provide highly professional quality work which are fashioned and tailored to give our clients the quality and satisfaction they require.
Employment contract is described as a contract between an employer and employee in which the terms and conditions of the employment...
Ghana Employment and HR
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Employment contract is described as a contract between an employer and employee in which the terms and conditions of the employment are contained. In addition to the terms and conditions contained in the employment contract, the Labour Law Act, 2003 (Act 651) ("the Labour Law") and the relevant sections in the act inserts further terms and obligations on the parties in respect of the employment contract.

Employment contracts are not lifetime contract. It can be terminated anytime by the Employer. However, the grounds for termination must comply with the relevant labour laws and the terms and conditions contained in the employment contract.


The Labour law has provided the following lawful grounds for termination of an employment contract:

  1. Mutual agreement between the employer and the employee;
  2. upon the death of the employee before the expiration of the period of employment
  3. If the worker is found on medical examination to be unfit for employment;
  4. If the worker is unable to carry out his or her work due to:
    1. sickness or accident; or
    2. the incompetence of the worker; or
    3. proven misconduct of the worker.


There is a lot of confusion about the legal implication of termination of employment contract without a reason. It had been decided in several cases, and before the enactment of the Labour Law, that an employment contract can be terminated by the Employer anytime without given a reason for the termination.

This position overtime has changed after the enactment of the labour law.


Under the labour law, upon termination of an employment contract, the employer may be called upon to prove to the satisfaction of the court or the labour commission that the termination was fair. The termination can be deemed to be unfair termination when the employer, when called upon, is not able to prove that the termination was fair.

The labour law defines fair termination as termination by the employer on any of the following grounds:

  1. that the worker is incompetent or lacks the qualification in relation to the work for which the worker is employed;
  2. the proven misconduct of the worker;
  3. redundancy under section 65;

On the basis of the above, an employer who terminates an employment contract without given reason may be called upon to prove that the termination was fair. However, if the employer is unable to prove same, the termination may be deemed to be an unfair termination.

It is therefore imperative that grounds for termination of employment contract should be streamlined in line with the labour laws of Ghana to limit any potential of employment dispute.

In summary, termination of an employment contract in Ghana may be deemed to be lawful and fair if the termination is based on one of the following grounds:

  1. Incompetence of the employee.
  2. Redundancy of the employee
  3. Mutual termination
  4. Ill health of the employee
  5. Proven misconduct of the employee
  6. Death of the employee

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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