Following recent turmoil in the Banking Industry, some banks have had to merge and others acquired in the last two years. This development has had dramatic consequence on employment. This occurred on the heels of the Bank of Ghana’s announcement of an increase of the minimum capital requirement for banks from Ghc 120million to Ghc 400 million in 2017.
It is public knowledge that, the crisis is partly attributed to macroeconomic instability, poor corporate governance and regulatory lapses. Sadly, the poor worker has to suffer the misery of job loses.
The revocation of the operational licenses of erstwhile Heritage Bank and Premium bank by the Bank of Ghana resulted in the issuance of termination letters to over 200 workers by the receiver. These employees I believe were covered under contract of employment or collective agreement. Granting without admitting that their relationship was not governed by any legal instrument, the Labour Act 2003, Act 651 would still suffice.
The purported termination letters captured as follows; “as explained to you on Friday, January 4, 2019 by virtue of the receivership, your contract of employment has terminated. For the avoidance of doubt, your working relationship is not suffering from severance under Section 65 of the Labour Act 2003 (Act 651),” it further indicated that, receiver intends to engage the services of the workers “for a period commencing from January 8 2019 and ending 31 March, 2019.”
For purposes of legal discourse the following logic is extracted from above letter;
- Heritage Bank and Premium Bank have collapsed into Consolidated Bank by the revocation of their respective license and subsequent approval of a purchase and assumption agreement with CBG to takeover some of the assets and all liabilities of the now defunct banks. Therefore the engagement of the employees is not to be considered as a favour but as an obligation until the parties to the contract appropriately terminate the contract as contemplated by the terms of the contract or the Labour Law.
- Again, the receiver appears to offer three (3) months temporal employment as against the permanent employment offered by the previous employer. This means that, there is diminution in a term or terms of condition of service as it existed prior to the takeover. An example of a condition that has suffered diminuation is the ‘Duration’ of the contract. Assuming the 200 employees were issued permanent employment letters with CBG without varying any of the terms of the contract to the disadvantage of the employees, my argument would have suffered a miscarriage.
- Finally, the purported termination letters suggest that ‘the termination is not suffering from severance under section 65’, this assertion in my view is misleading and an attempt to deny the workers of their legal entitlement under the same Act reference by the receiver.
Is there a legal provision?
The Section 65 (2)(3) of the Act 651, Act 2003 stipulates as follows;
2) Without prejudice to subsection (1), where an undertaking is closed down or undergoes an arrangement or amalgamation and the close down, arrangement or amalgamation 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 that worker becomes unemployed or suffers any diminution in the terms and conditions of employment, the worker is entitled to be paid by the undertaking at which that worker was immediately employed prior to the close down, arrangement or amalgamation, compensation, in this section referred to as “redundancy pay”.
(3) In determining whether a worker has suffered any diminution any diminution in his or 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.
The Act as quoted above, entitle employees to compensation under redundancy on following grounds;
- Where the company undergoes shut down, close down or amalgamation
- Where the shutdown is likely to affect the very employment of the workers
iii. Where the close down result in the reduction or diminution of the terms and conditions of service.
- Where the past services and accumulated benefits of the employee with the previous employer is likely to be affected.
- It is evident that the circumstance under which these employees are been sent home fall precisely under the above grounds for which they are entitle to severance pay contrary to the position of the new employer (receiver).
I call on the leadership of organize labour to arise in their unvanquishable strength to resist what will eventually become a capitulation and decapitation of the core mission of Trade Unions in the country.
By: Kenneth Koomson
Dated: 20th January 2019, Accra.