The Redundancy/Reduction-in-Force Process in Ghana

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BlogPost 003-18

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Redundancy/Reduction In Force Processes in Ghana.

The process is quite straight forward…

1. Notify Chief labour officer of reason for the RIF and number of employees involved. Also notify union if workers are unionized or just notify the general worker body if not unionized. This should be done at least three months to the actual RIF exercise.

2. Redundancy consultations begin (with union in union environment or with workers in non union environment) on the process, criteria for selection of workers and possibly alternative employment etc.

3. Then a “Redundancy Compensation” package is negotiated. Management normally makes offer and then discussions commence. In union environments, union puts forward the proposal for negotiation. In some cases however, redundancy package is already negotiated into condition of service or collective agreement in which case no negotiation will be needed.
Hopefully an agreement (Redundancy Settlement Agreement) is signed off and executed.

4. Where there is no agreement, parties undergo dispute resolution processes in accordance with their policy or the NLC disputes resolution processes under the National Labour Commission Regulations of 2006, LI 1822.

Pitfalls:
1. Communication – when and how to notify employees and other stakeholders. You’d need a communication plan for each stakeholder engagement. Stakeholders are employees, unions, relevant government agencies, sometimes the media, shareholders and customers.

2. Consultation – Who and what to consult on. Often, a roadmap or schedule and implementation plans are developed and finalized through discussions and stakeholder engagements. Alternative employment and other plans for affected workers should be discussed here also.

3. Identification and selection of affected staff
– a fair criteria should be agreed for the selection of affected workers. Where selection is done haphazardly, it triggers conflict and insecurity.

4. Determination of redundancy package.
– if already part of condition of service or collective agreement, then this should not be an issue. Otherwise, specific package will be determined and discussed (negotiated) for agreement with union or worker reps. Package is often hinged on number of years worked. Average payments now range between 1.5 – 2.5 months basic pay multiplied by each yr of service.

5. Terms of payment.
– whether to pay all at once or in installment. Whether payment should be on/before actual date of exercise or payment can extend beyond the date of the exercise. Whether employees can be made to go home and paid at a latter date. Section 18 of Act 651 on termination remuneration deals with this. An agreement for installment payment is negotiable.

6. Redundancy notice.
– whether three months ‘notification’ of the Chief Labour Officer and union constitute ‘notice of termination’ or not.
Where employees or union are not notified three months to the effective date of redundancy, whether to pay three months salary in lieu of notice or pay in lieu of the normal termination notice per contract of employment? Redundancy termination is a type of termination of employment and should be subject to termination notice under the contract of employment or section 17 of Act 651.

6. Funding the process.
– The RIF laws of Ghana leave a lot to the parties to sort out and makes the process expensive. Employers should be guided by ability to pay and must be able to justify same. A fund is often proposed to put money away (monthly or annual financial provision) to be utilized when a RIF becomes imminent.

8. Disputes
– RIF processes are often very emotionally difficult for both parties and result in a lot of disputes. Dispute resolution clauses must be included in policies and collective agreements to cater for redundancy disputes when they occur. At law, when negotiation fails, mediation and arbitration under the NLC rules (LI 1822) applies.

Mediation is one of the fastest ways of resolving RIF disputes and then arbitration when mediation fails. Parties can privately select mediator or arbitrator without necessarily going to the National Labour Commission. However, agreements must be filed with the commission and sometimes the courts as the case may be under the ADR Act, 2010 (Act 798).

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