Publication

Managing Employment Challenges Amid USAID Funding Cuts

The government of the United States of America recently issued an Executive Order suspending all foreign assistance for 90 days, prompting USAID to halt its international program operations. This decision has disrupted USAID-funded projects, creating uncertainty for employers reliant on USAID funding. Employers must assess workforce adjustments while ensuring compliance with Ghanaian labour laws. Some strategic options for employers to consider include:

• Termination with Notice: Under Ghanaian law, an employer may terminate an employee’s employment at any time by giving the agreed notice or paying the employee the equivalent salary in lieu of the notice. Upon termination, employees are entitled to all statutory and contractual benefits owed to them at the time of termination.

• Redundancy: An employer may declare a redundancy in the event of a business downsizing, i.e., when the business no longer requires the same number of employees to carry out work of a particular kind or a close down of the business. Termination due to redundancy must comply with the redundancy procedures set out in the Labour Act, 2003 (Act 651) (“Labour Act”), including negotiating redundancy pay.

Other considerations

While the Labour Act provides a framework for employment relations, specific rights and obligations largely depend on employment contracts. Employers may explore alternative contractual arrangements, including:

• Temporary Unpaid Leave or Furlough Leave: Ghanaian law does not have provisions for temporary unpaid leave. This would therefore be a contractual arrangement. Employers may negotiate such leave with employees, ensuring clear terms regarding rights and obligations. In such arrangements where employment is not terminated, statutory benefits such as annual and maternity leave are not extinguished.
• Transition from Full-Time to Part-Time Employment: Significant contract modifications require employee consent. A unilateral change by an employer could be considered a termination, potentially leading to claims of unfair dismissal. Contract changes should follow an offer-and-acceptance model, formalised through a new or amended agreement. Employers must clearly define whether changes are temporary or permanent and obtain employee consent.

Employers should navigate workforce adjustments by adhering to the Labour Act, maintaining clear communication and securing mutual agreement with employees.

Recommended Content

Ghana’s Corporate Commercial Outlook 2024

March 28, 2024

Ghana’s Domestic Workers Regulations

September 1, 2022

Author

Load More