Career Advice

Sections 96 to 111 of the Labour Act cover collective agreements. Commencing with the duty to bargain in good faith (section 97), these provisions regulate registration as appropriate representative units for entering into bargaining with the Chief Labour Officer. Once issues with the relevant certificate, the trade union and the employer must nominate their negotiating committees (s. 101) and without prejudice to this process, a duly appointed officer or member of a union may likewise conduct negotiations with the employer. Failure to enter into negotiations - within 14 days after service of notice to commence from one party to the other - leads to a direction from the National Labour Commission to do so (s.104). The provisions of agreed collective agreement take precedence over the terms of any contract unless the latter are more favourable to the worker and it is immaterial whether the contract was concluded before the collective bargaining agreement (s. 105(4)). Under section 107(1), collective bargaining agreements shall be for a term of at least one year, and they must contain a provision for a final and conclusive settlement of any disputes between persons to whom the agreement applies, using the provision of the Labour Act for such settlement. Section 111 permits the collection of union dues.

Since the ratification of Convention No. 98 in 1959 and the subsequent passage of the Industrial Relations Act of 1965 and now the Labour Act, Ghanaians, at least those in the formal sector, have exercised this right and have, in fact, used collective bargaining as the main instrument to improve working conditions particularly at the enterprise level. A typical collective agreement covers issues such as hours of work, wages and salaries, rest periods, overtime work and payments, dispute settlement procedures, promotion and training, holidays, discipline, dismissal and termination procedures and many other issues relating to employment and non-employment of a class of workers covered by the collective agreement. It is noteworthy, however, that out of the over 10 million strong Ghanaian workforce, only about 10 percent is in the formal economy.

Employers or their organisations and workers or groups of workers who seek to threaten or intimidate the other party during negotiations of a collective agreement are guilty of an unfair labour practice (s.129).

According to an ILO paper collecting practical information[3], most collective bargaining agreements (CBAs) in fact have a duration of 2 to 3 years. Some provide for indexation and other mechanisms that automatically adjust wage levels as general economic conditions such as inflation changes. A 2001 survey of 96 enterprises in Ghana showed that over 37% of CBAs had wage indexation clauses which requires wage to be adjusted upward when inflation rises above a certain level while CBAs with long duration usually had a wage re-opener clause that allows the parties to review wages at least once every two years.

In general, the provisions in CBAs are adhered to in the formal sector especially where there is unionised labour. The problem lies with the informal sectors where many of the employees do not belong to unions or employees associations. It is estimated that 88.3% employees working in the informal sector are not covered by CBAs. In their case, employment conditions are determined either exclusively by the employer and the employees through informal bargaining.  The situation could be worse in the agricultural sector. The General Agricultural Workers Union estimate that only about 8% of agricultural labour is in the formal sector mostly in commercial agricultural farms. A review of some of the CBAs in the formal agricultural sector indicates that they contain the basic provisions required by law in addition to other benefits such as health, vehicles, housing, provident fund and end of service benefits. However, such benefits are absent in the informal sector where the majority of agriculture labour is found.

The structure of bargaining in the formal sector is largely decentralized and formal, although centralized bargaining often sets the tone for wage negotiations. As noted above, the NTC centrally fixes the national minimum wage, which provides the basis for decentralized bargaining and adjustment in formal sector wages through CBAs.  The TUC coordinates and provides guidance to the national unions in their bargaining. Local unions sometimes involve regional or national union officials in collective bargaining while both local unions and employers sometimes use industry-wide trends and practices to determine their own settlements, especially in the building and construction industry.

The nature of bargaining in the labour market has implications on flexibility as well as employment and wage settlements. Empirical observations suggest that highly centralized bargaining increases the leverage of the local union at the national level and lower frequency of strikes whiles decentralized bargaining leads to greater flexibility and leverage and helps employers to respond to changing market conditions. However, it is costly to small firms.

There are indications that decentralized bargaining is deepening. This is evidenced by the widening diversity of employees’ interests, which has forced employees to become less willing to pursue common aspirations at the expense of personal goals, changing work organization resulting from flexible technologies and the reduction in the power of local unions relative to local employers who prefer decentralized to centralized bargaining.