Introduction to Payroll in Ghana
Securing top talent in the Republic of Ghana necessitates strict compliance to the country’s local labor laws that include sensitive aspects like payroll. Businesses looking to engage remote workers in Ghana need to fully comply with local employment regulations or otherwise risk costly legal fees and penalties, not to mention strained relationships with employees. Expert HR and payroll solutions providers like Skuad provide the local legal expertise to help businesses stay compliant with local regulations while implementing seamless payroll processing.
Skuad can help you navigate the complex local labor regulations in Ghana that covers everything from employee salary calculations to taxation to deductions and benefits, and others:
- Income, regional, or corporate taxes
- Social security costs, like health insurance, unemployment benefits, and pension
- Types of leaves and holiday compensation
- Other employee deductions
Payroll Process in Ghana
The payroll process consists of pre-payroll, calculation, and post-payroll. Local labor laws guide what is involved in each step and what should be done in each.
The pre-payroll phase is where policies are standardized and inputs are collected and validated for the next steps of the process.
Setting up the organization
A lot of internal policy needs to be updated and standardized so that payroll can be processed with ease. These policies include:
Your business profile is the set of identifications and registered business numbers needed for submission and reports of relevant supporting documentation.
Workplace policy should be customized to the location, even if you have businesses in multiple locations throughout the country.
The types of leave, their structure, and their pay rates (compared to the base rate) will affect payroll computation. Ensure that leave policies are made clear and transparent for employees.
Attendance policy also needs to be clear, transparent, and accurate. It must be fully compliant with local mandated regulation. In your internal attendance policy, you’ll also need to factor in overtime, half-days, and other adjustments, as well as any tools integrated into the attendance tracking process, like time sheets.
Ghana’s labor laws cover many aspects of employment practice and payroll, and your internal policy needs to be compliant wherever necessary. Discuss with your in-country experts or partner providers to ensure strict compliance to local legislation.
An employee’s salary is a balance between many different factors:
- Mandatory local guidelines
- Internal company policy
- Market rates and industry standards
- Cost of living
- Additional considerations, such as supplementary benefits to round out the compensation package
In Ghana, the pay schedule is monthly, and salaries must be paid on the same day every month, or no later than that month’s last working day. You need to take into account work culture norms when considering pay schedules.
A lot of the input collection and validation in the pre-payroll phase involves employee information, and any forms and supporting documentation that are relevant to payroll. This involves reimbursements, invoices, and even notes on performance review bonuses.
Payroll Calculation Phase
The calculation phase is dedicated only to the computation of wages. This phase is entirely dependent on the due diligence performed in the pre-payroll stage, and is a culmination of meeting mandated standards and implementing internal company policies. For this phase, software automation makes a lot of the work more efficient, provided the systems used are properly aligned and calibrated to work with the policies standardized in pre-payroll.
The actual payout is the primary action taken during the post-payroll phase. This occurs when you send advice to your bank or your payment processor on how to mete out salaries. In this phase, software can again come in handy with features like direct deposit and automation.
As salaries are typically a massive business expense, internal accounting is part of the post-payroll phase.
Payroll reporting and compliance
For compliance purposes, the post-payroll phase also involves reporting to external bodies such as appropriate government departments and agencies.
Want to see how the payroll process works? Get in touch with Skuad to see for yourself how payroll in Ghana is implemented.
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Payroll Processing in Ghana
Due to the potentially complex compliance issues surrounding local labor laws in Ghana, many businesses opt to outsource payroll processing to expert partners who can help. Solutions providers like Skuad can help your HR and payroll departments avoid compliance concerns.
Payroll Processing Company in Ghana
Skuad is a global HR and payroll solutions provider that offers the in-country expertise and global platform to guarantee compliance to local labor laws and empower international remote hiring and management.
Payroll Management in Ghana
In addition, Skuad also offers payroll management. Payroll management, often required by law as part of the payroll process backend, involves the maintenance of supporting documents and records relevant to payroll in Ghana.
Payroll Compliance in Ghana
Ghana’s labor laws are primarily codified in the country’s Labor Act No 651 of 2003, which consolidates and updates previous pieces of labor-specific legislation in scattered Laws and Acts. It also introduces provisions that espouse ratified Conventions from the International Labor Organization (ILO).
Payroll Components in Ghana
To guarantee strict compliance with local employment legislation specifically relating to payroll in Ghana, you first need to get a better understanding of its components. Payroll can be broken down into three parts: the base pay, the taxes and deductions, and the bonuses and benefits. All of these aspects are affected by Ghana’s labor laws as well as your internal company policy.
The nationally mandated minimum wage in Ghana is 13.53 Ghanaian Cedi, or GHS, per day. Ghana’s exchange rate currently stands at $1 for every GHS 7.52. This minimum is far below the national average salary of GHS 900 ($119.60) a month.
Employees in Ghana work eight hours a week for five days for a total of 40 hours per week. These hours can be extended to 48 hours per week for specific sectors or industries.
Overtime in Ghana is governed by collective agreements as well as contract terms between employers and employees. Typically, any work rendered in excess of 40 hours a week is paid at 1.5x the base rate.
Mandatory social security contributions in Ghana are split between the employer and the employee, who contribute 13% and 5.5% of the employee salary respectively. Both employer and employee can voluntarily contribute more to the social security fund, however, with appropriate tax exemptions.
Ghana does not have definitions or regulations for paid sick leaves. However, Ghana’s Labor Act entitles employees to 15 days of paid leave for every year served.
New mothers are entitled to 12 weeks of paid maternity leave, or 14 weeks in case of complicated or multiple births. Additionally, once back from maternity leave, mothers are entitled to an hour of paid leave during work hours to nurse their child until they reach their first year of age.
There are no statutory paternity leave regulations for new fathers.
In Ghana, there are 13 statutory public holidays, in addition to commemorative days.
- New Year’s Day
- Constitution Day
- Independence Day
- Good Friday
- Easter Monday
- May Day (Workers’ Day)
- Founders’ Day
- Kwame Nkrumah Memorial Day
- Farmer’s Day
- Christmas Day
- Boxing Day
Income of employees in Ghana are taxed at a progressive rate based on how much they are paid:
- Below GHS 3,828: 0.00%
- Next GHS 1,200: 5.00%
- Next GHS 1,440: 10.00%
- Next GHS 36,000: 17.50%
- Next GHS 197,532: 25.00%
- Over GHS 240,000.00: 30.00%
Additional aspects of HR involving payroll that you may want to be more familiar with include probation and termination. There are no nationally mandated guidelines for employee probation, and these terms are normally governed by collective agreements and/or individual employment contracts.
In terms of notice period for termination:
- Two weeks notice (or two weeks pay in lieu of notice) for a contract of less than three years
- One month notice (or one month pay in lieu of notice) for a contract of three or more years
- Seven days’ notice for a week-to-week contract
- End-of-day notice for other contracts determinable at will by either employer or employee
Need a deeper, more detailed understanding of payroll in Ghana? Book a demo with Skuad’s in-country experts to discuss more now.
Outsourcing Ghana Payroll Processing
Businesses in aggressive stages of growth may need remote workers in globally distributed locations. These workers are crucial for sustaining the business's competitive edge. This means, however, that they are faced with compliance challenges not only in Ghana, but everywhere else where they need to hire and pay remote workers. Compliance to local labor laws in multiple countries necessitates in-country expertise that in-house resources simply cannot handle, so expert partners like Skuad come in and alleviate the problem.
As a global HR and payroll processing leader, Skuad helps you stay compliant with local employment legislation in Ghana and practically anywhere else in the world. Better yet, as an HR platform Skuad can extend its services from payroll processing to HR management, giving you flexibility for your business growth needs.
Looking to outsource payroll in Ghana? Request a demo from Skuad to see how you can hand over payroll processing so you can focus on other areas of your business.