BROKEN TIES – TERMINATION OF A CONTRACT OF EMPLOYMENT

In a previous article we had a discussion on how to start an employment relationship right.  Like all other contracts, parties are at liberty to terminate their contract of employment at anytime in accordance with law.

According to the 2015 Statistical Report of the Ministry of Employment and Labour Relations the National Labour Commission (NLC), mandated by the Labour Act, 2003 (Act 651) to settle industrial disputes, received complaints in the areas of unfair termination, summary dismissal, unpaid salaries, medicals, retirement/end-of-service benefits, redundancy/lay off/severance pay, workmen’s compensation and others (maternity protection & poor conditions of service). The number of complaints received increased from 560 in 2014 to 654 in 2015. Unfair termination and summary dismissal complaints specifically increased by 61 and 15 respectively in 2015. This is a wake-up call to increase awareness of how to sever employment relationships without any qualms or disputes.

Chitty on Contracts, Chapter 39 paragraph 150[i], states that aside any relevant statutes or law, any issue regarding the duration of the contract of employment, the notice of termination, etc will depend on the intention of the parties either made known in the express or implied terms of their contract or to be inferred from all the surrounding circumstances.

It may be surmised from the proposition above that the intention of the parties will always prevail in a contract of employment. So, in the case of Kobi v Ghana Manganese Co. Ltd[ii] Atuguba JSC intimated that a contract of service is not a contract of servitude. That being so even if the contract of employment is silent on the question whether it is terminable the common law implies a right to terminate the same by either side upon reasonable notice to the other. 

The Labour Act[iii] by section 17 stipulates that a contract of employment may be terminated at any time by either party giving to the other party a month’s notice or salary in lieu of notice in the case of a contract of three years or more and in the case of a contract of less than three years, two weeks’ notice or two weeks’ salary in lieu of notice. Where the contract is weekly the law requires that the party seeing to terminate the contract gives to the other party seven days’ notice.

It must be noted that notice may not be required in all cases. This is because section 17(2) of the Labour Act provides that where the contract of employment is one determinable at will by either party, it may be terminated at the close of any day without notice. A contract of employment would be deemed to be determinable at will if remuneration is at a rate other than monthly or weekly.

It is stated in Chitty on Contract[iv] that if a contract of employment makes no express or specifically implied provision for its duration or termination by notice, there is likely to be implied at common law a presumption that the contract is for an indefinite period and terminable by a reasonable notice given by either party.

By Section 15 of the Labour Act, a contract of employment may be terminated by mutual agreement between the employer and the worker, by the worker on grounds of ill-treatment or sexual harassment, by the employer on the death of the employee before the expiration of the period of employment, by the employer if the employee is found on medical examination to be unfit for employment, by the employer because of the inability of the employee to carry out his or her work due to sickness or accident, the incompetence of the employee or the proven misconduct of the employee.

Regardless of these factors provided by the law as being valid reasons for the termination of employment, it has been held in some cases that a party may terminate a contract of employment without assigning any reasons for the termination. This was espoused in the Supreme Court decision of Korbieh & Others v Tema Oil Refinery; Boateng and Others v Tema Oil Refinery (Consolidated) [2003-2005] 1GLR 485 in which case it was held that in an action for breach of contract of employment the employer was not liable for not doing what he was not bound to do. Accordingly, since article 4(vii) did not require the respondent to give any reasons for termination of theemployment of the appellant under that article the termination of the appellant under that article the termination of the appellant’s contract of employment was not wrongful.

As is the norm, most of the time employees terminate their contract of employment (i.e. resign from their employment) without ascribing any reasons for their decisions. However, it seems to be the practice of most employees to run to the National Labour Commission to complain about unfair termination when their contract of employment is terminated without any reasons.

When a contract of employment is terminated in accordance with Section 15 of the Labour Act, the employer is required to pay to the employee any remuneration earned by the worker before the termination, any deferred pay due to the employee before the termination, any compensation due to the worker in respect of sickness o accident and in the case of foreign contract, the expenses and necessaries for the journey and repatriation expenses in respect of the worker and accompanying members of his or her family in addition to any or all of the outstanding payments.

All remuneration due the employee by the employer ought to be made before or on the expiration of the notice but if no notice is required then the payments of the outstanding remuneration may be made not later than the next working day.

It is important to note that where there is a collective agreement and there are express provisions regarding the terms and conditions of termination, the provisions of the labour act would not apply unless the terms and conditions as stipulated in the collective agreement are less beneficial to the employee.

As much as possible, the termination of a contract of employment must be fair and according to Section 62 the termination of a contract of employment is fair if the contract is terminated on the grounds that the worker is incompetent, has been proved to have misconducted him or herself, has been made redundant or due to some legal restrictions imposed on the worker preventing him or her from performing the work for which he or she is employed.           

The law forbids employers from terminating the employment of the worker unfairly.  So, the Labour Act provides that a worker’s employment is terminated unfairly if the only reason for the termination is that the worker has joined, intends to join or has ceased to be a member of a trade union or intends to take part in the activities of a trade union. In addition to the above, if the employee’s contract is terminated for the reason that that employee seeks office as, or is acting or has acted in the capacity of a worker’s representative or that the worker has filed a complaint or participated in proceedings against the employer involving alleged violation of the labour act or any other enactments, that termination would be regarded as unfair.

Again, the termination of the employment by the employer would be deemed unfair if the termination is as a result of the worker’s gender, race, colour, ethnicity, origin, religion, creed, social, political or economic status and in the case of a woman worker due to the pregnancy of the worker or the absence of the worker from during maternity leave. In the case of The Commissioner, CHRAJ & 2 Others v. Ghana National Fire Service & Attorney-General[v] in which case the court made a declaration that Regulation 33(6) of the Conditions of Services of Ghana National Service, which required employees of the GNFS who were women to avoid being pregnant until three years after their employment to avoid dismissal, was discriminatory and in effect unjustifiable, illegitimate and illegal. The court consequently ordered the reinstatement of two employees who had been dismissed as a result of becoming pregnant within the first three years of their employment, payment of all arrears of their salaries and emoluments that had accrued to them during the period of dismissal as well as compensation for the trauma and inconvenience of the wrongful dismissal.

Where the contract of employment of a worker is terminated because of that worker’s disability, temporal ailment or injury it would be considered unfair.

Termination of an employment is unfair if the only reason for terminating the employment of a worker is that the worker does not possess the current level of qualification required in relation to the work for which the worker was employed which is different from the level of qualification required at the commencement of his or her employment. That is why the employer is obliged to engage in retraining of its workers as when the need arises.

If with or without notice, an employee’s contract of employment is terminated because of ill-treatment of the worker by the employer or because the employer has failed to take action on repeated complaints of sexual harassment of the worker at the work place it would be considered unfair.

Furthermore, a termination may be unfair if the employer fails to prove that the reason for the termination is fair or the termination was made in accordance with a fair procedure or the Labour Act.

Section 64 of the Labour Act prescribes some remedies for unfair termination. According to the Labour Act, a worker who claims that his or her employment has been unfairly terminated by his or her employer may present a complaint to the Labour Commission and if upon investigation the Commission finds that the termination of that employee was indeed unfair it may order the employer to re-instate the worker from the date of the termination of employment, order the employer to re-employ the worker either in the work for which the worker was employed before the termination or in any other reasonably suitable work on the same terms and conditions enjoyed by the worker before the termination or order the employer to pay compensation to the worker.

The most significant feature of termination of employment is the issue of notice as has been discussed extensively above so that if notice or alternatively the salary in lieu of the notice which is required is not duly given it would be deemed as unfair.

However, it must be noted that there are times when the contract of employment may be severed without giving any notice to the party involved. This usually occurs when there has been a gross misconduct or some other offence such as stealing etc. on the part of the employee which has been proved or established upon thorough investigation and the offender being afforded the opportunity to defend his case. In such a case there may not be any need for notice and the employee may be summarily dismissed in accordance with the contract of employment as well as the labour act. However, in order to avoid unnecessary culpability in unfair termination issues i humbly opine that employers always err on the side of caution and make available the notice period no matter the circumstance.

There is a vast difference between unfair termination which is extensively regulated by the Labour Act and Wrongful termination or dismissal which is a product of common law. This was also espoused in the recent case of Charles Afran & Ors v SG-SSB Limited[vi]   in which case the learned Justice Kotey JSC stated as follows:

“unfair termination, as distinct from the common law concept of “wrongful dismissal”, is therefore a creature of statute, currently the Labour Act, 2003 (Act 651)……………..We hold that the trial court erred when it failed to consider whether the Plaintiff’s employment had been wrongfully terminated under the terms of his contract of employment. This was required of the trial high court as an initial first step. This failure was a grievous error.”

From the above quotation of the learned Justice, it appears that termination of a contract of employment ought to be in accordance with the contract of employment or in accordance with the labour act. A termination which contravenes the contract of employment which embodies the intentions of the parties constitutes a wrongful termination and that which sins against the Labour Act, especially the provisions on fair and unfair termination constitutes unfair termination.

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[i] Chitty on Contracts (Thirtieth Ed., Vol. 2) page 1108

[ii] [2007] 13 MLRG

[iii] 2003 (Act 651)

[iv] Chitty on Contracts (Thirtieth Ed., Vol. 2) page 1109

[v] Suit No. HR 0063/2017 delivered on 23 April, 2018 (unreported)

[vi] Civil Appeal No. J4/71/2018 (Judgment delivered on 21 March 2019)