THE LAW BEHIND THE HUSTLE LABOUR LAW SERIES — PART 1

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What Is a Contract of Employment 
At the heart of every employment relationship is a Contract of Employment. According to Ghana’s Labour Act, 2003 (Act 651), a contract of employment is either written, oral or implied and it becomes mandatory in writing when the work continues for six months or more. In fact, the Act makes it clear that if you engage someone to work with you for six months or more or for the equivalent number of days in a year, you must give them a written contract. It goes further to say that within just two months, you must furnish them with a written statement of the terms.
This contract must include basic but essential details like the employer’s and worker’s names and addresses, job title, salary and payment intervals, working hours, leave entitlements, sickness policy, disciplinary rules, termination notice periods, and more.

Why should you care as an MSME?
Without a proper contract:
-       You risk legal penalties for non-compliance.
-       You leave yourself open to disputes you can’t win because there’s no documented agreement.
-       And you might lose access to opportunities that require proof of labour law compliance, like bank partnerships, contracts or government support schemes.
 
Imagine you hire someone to “help” with deliveries. No written contract. They work with you for 8 months. One day you have a misunderstanding, and they walk out. You think it’s over but a few days later, you’re called to the Labour Department. They’re claiming unlawful dismissal, leave pay and end-of-service benefits. You say there was no agreement. They say there was. Who wins? Not the one without paperwork.

The truth is, verbal agreements can be valid, but they are very hard to prove when conflict arises. That’s why the law pushes for written contract to protect both the worker and the employer.
For MSMEs, it’s even more crucial. You’re already juggling operations, marketing and cash flow. You can’t afford labour drama and you can’t scale chaos. Having structured contracts helps you manage expectations, avoid confusion and position your business for serious growth.

 

So, if you’re employing anyone, draft your contracts. Know your obligations and always protect your hustle with the law.

 

 

 

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