Redundancy is defined as the termination of employment because of the disappearance of the need for the particular job. Under the Labour Act, 2003 (Act651), redundancy occurs when an employer contemplates the introduction of major changes in production, programme, organization, structure or technology  of  an undertaking that are likely to entail terminations of employment of workers in the employment. This means that “Redundancy” occurs under certain or some specific conditions, and when this happens certain rights accrue to the worker who is declared redundant.

When does redundancy occur? Termination due to redundancy. The Labour Act provides under section 65(1)(a) that when a situation occurs where contemplated changes in the way a business operates will lead to terminations of employment of workers, the employer should inform the Chief Labour Officer in writing and the Trade Union concerned, not later than three months before the contemplated changes. This information must include the reasons for the terminations, the number and categories of workers likely to be affected and the period within which any termination may be carried out.

Additionally, the employer must also consult the trade union to which the effected workers belong 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 including finding alternative employment.

What are workers benefits under redundancy?

Under section 65(2) of Labour Act 651, the Law provides that if as a result of an arrangement or amalgamation a business is closed down and this causes:

a) severance of the legal relationship of worker and employer as it existed immediately before the close down, arrangement or amalgamation, and

b)  as a result of and in addition to the severance a worker becomes unemployed or suffers diminution in the terms and conditions of employment, that worker is entitled to be paid “redundancy pay”.

A worker is therefore entitled to redundancy pay only when due to an arrangement amalgamation or close down of a business that worker becomes unemployed or suffers diminution in the terms and conditions of employment.

 Section 65 (3)  and (4) states that in determining whether a worker has suffered any diminution in his her terms and conditions of employment, account shall be taken of the past services and accumulated benefits, if any , of the worker in respect of the employment with the undertaking before the changes were carried out.

 (4) The amount of redundancy pay and the terms and conditions of payment are matters which are subject to negotiation between the employer or a representative of the employer on the one hand and the worker or the trade union concerned on the other.


Certain categories of workers are exempted under section 66 of the Labour Act 651:

They are:

 a) Workers engaged under a contract of employment for specified period of time or specified work;

b) Workers serving a period of probation or qualifying period of employment of reasonable duration determined in advance and

c) workers engaged on a casual basis.

In conclusion both employers and workers are encouraged to inform themselves properly of section 65 of the Labour Act, 2003(Act 651) whenever any of the situations mentioned above occurs which may lead to terminations of employment or variation i.e., alteration of the employment relationship or conditions in the employment relationship as it existed before the changes in the business occurred.

by Eunice Lawer, Public Affairs Officer at National Labour Commission- Accra. Writer’s E-mail: