Austin A. Gamey, renowned labour expert
Austin A. Gamey, renowned labour expert
- Advertisement -

By Austin Akufo Gamey, FIHRMP, MA. ADR. (PULSE)

I have followed closely the usage of two key jargons or terminologies which are interchangeably used in the field of industrial relations, especially during a break in workplace relationship between employers and workers.

The purpose of this article is to give intense ventilation to enable professionals and practitioners in the field to come to the grip of the proper use of these two terms- “Severance” and “Redundancy”.

- advertisement -

The word severance is an action of ending a connection or relationship which exist between two parties. In the case of an industrial relationship, an employer or employee has a right to severe working relationship at anytime but the action cannot be ordinarily taken without following due legal procedures .

In Ghana, section 65 of the Labour Act 2003, Act 651 expressly provides for the procedures that must be followed when an employer decides to severe relationship with his/her worker(s).

The  Sec 65 (1)(a) and (b) state that “When an employer contemplates the introduction of major changes in production, programme, organisation, structure or technology of an under-taking that are likely to entail terminations of employment of workers in the undertaking, the employer shall;

(a) provide in writing to the Chief Labour Officer and the trade union concerned, not later than three months before the contemplated changes, all relevant information including the reasons for any termination, the number and categories of workers likely to be affected and the period within which any termination is to be carried out; and

(b)consult the trade union concerned on measures to be taken to avert or minimize the termination as well as measures to mitigate the adverse effects of any terminations on the workers concerned such as finding alternative employment.

The Redundancy pay is the severance package which includes benefits a worker(s) receives when they leave employment at a company in addition to their remaining regular pay and any additional payment based on the number of years of service. It is this redundancy pay that is usually negotiated between the worker and the employer as a result of a severance.

As you will see clearly from the relevant sections above , until and unless there is a severance of legal relationship of  a worker and employer as a result of a company undertaking structural changes or some  other arrangement , or a joint venture of a kind which may be the cause of the severance of the existing legal relationship, there certainly will be no need for the worker to be paid what legitimately can be described as redundancy pay.

Prior Action

There is however a key prior action that must be triggered by the employer or any company seeking to take action as described above.

The first action under section 65 (i) is for the employer who may notice the need to embark on structural or technological changes that are likely to affect the working relationship to provide in writing to the Chief Labor Officer and to the union if the workers are unionized, not later than three (3) months before the intended action as stated in subsection (a) of section 65.


It appears many employers and unions have suffered needlessly and have introduced adversarial posture when the two sides get to discuss matters of consultation as a consequence of the information sent to the chief Labor Officer.

Indeed, consultation in this regard is not intended to be a “take it” or “leave it” situation.

On the contrary, it is not intended to help the two social partners to have an open conversation about a delicate matter such as a non-employment issue that affect its members.

It is widely understood that the employer, the union or the worker may likely come to a mutual agreement that may become measures to be taken to mitigate and minimize the effect of any such terminations, that is the essence of the consultation, not intending it to be on an information sprang on the one side .

Redundancy Pay Negotiation

It is only when all these steps have been taken that the parties may trigger or activate subsection (4) to negotiate the amount of the payment to compensate the worker (s) should they suffer any diminution as result of either the mitigation or severance.

Resolving Conflicts

As expected in any action in industrial relations, the element of conflict arising out of the negotiation or the exercise as a whole cannot be ruled out. Therefore, the law further makes explicit provision in subsection 5 for the resolution of conflict, stating that “Any dispute that concerns the redundancy pay and the terms and conditions of payment be referred to the Commission by the aggrieved party for settlement, and the decision of the Commission shall subject to any other law be final.”

The parties may also seek the help of any mediator to assist in resolving their differences or employ application of the section 63 of the ADR Act 2010 (Act 798) or section 5 (1) (a).

It is my hope that this explanation goes a long way to assist employers, unions and workers in general to be mindful of the procedures that must be followed for the successful and peaceful severance and ensuing negotiations.