Employer of record in Uganda

Paid Time Off

Annual Leave: Employees in Uganda are legally entitled to a minimum of 21 consecutive days of paid annual leave per year, excluding official public and religious holidays. Collective bargaining agreements must ensure that employees receive at least one paid day off for every 17 days worked or for which they are entitled to compensation. Public holidays that are nationally recognized must also be granted as paid days off.

Sick Leave: Employees who fall ill should not lose their right to earn a livelihood. Under Uganda’s labor regulations, the initial three days of absence due to illness may not be eligible for sick pay. However, workers are entitled to receive income support for up to six months during a period of illness, with a minimum of 50% of the statutory wage. Alternatively, countries may implement systems offering 60% of an employee’s former salary during illness, extending up to a year.
During this time, medical care must be accessible without additional cost to the employee. Dependents should also receive essential health care at an affordable rate. Employees cannot be terminated due to illness within the first six months of falling sick.
In cases of work-related illness or injury, the employee is entitled to increased compensation. For temporary or permanent disability, the employee should receive at least 50% of their average salary, and in the case of death, dependents are eligible for monthly payments equal to 40% of the deceased’s regular income.

Maternity Leave: Pregnant workers are entitled to a minimum of 14 weeks of maternity leave, during which they must receive at least two-thirds of their usual salary. Expectant or nursing mothers must not be required to perform tasks that may pose health risks to them or their child. Additionally, they are protected against dismissal or discrimination during pregnancy and while on maternity leave. After maternity leave, employees must be reinstated to their former or a similar role. Nursing mothers must also be given paid breaks to breastfeed their child after returning to work.

Paternity Leave: Male employees are granted four paid working days of paternity leave annually. These days are paid by the employer as part of regular salary, although additional compensation is not mandated by law. However, individual employers may choose to offer further benefits.

Family Leave: Ugandan labor law does not provide statutory family leave outside of maternity and paternity provisions.

Public Holidays: Uganda observes 18 official public holidays annually, and employees are entitled to paid leave on these days.

Other Paid Leave: There are no specific provisions for other types of paid leave under current legislation.

Statutory Benefits, Payroll, and Tax Overview

Employer Contributions: Employers in Uganda are obligated to contribute to the following statutory schemes on behalf of their employees:

• National Social Security Fund (NSSF): Employers contribute 10% of the employee’s gross monthly salary.
• Pay-As-You-Earn (PAYE): Employers are responsible for withholding and remitting income tax from employee salaries, based on the Uganda Revenue Authority’s (URA) progressive tax brackets.
• Local Service Tax (LST): Employers may be required to deduct this annually from employees and remit it to local authorities, depending on the employee’s earnings and municipality.
• Skills Development Levy: Although not universally enforced, certain industries may be required to contribute toward vocational skills development.

Employee Contributions: Employees also contribute to the NSSF, typically at a rate of 5% of their gross salary. This is automatically deducted from their wages and remitted by the employer together with the employer’s portion.

Taxation of Employment Income: Uganda operates a progressive income tax system for individuals:

• Monthly income up to UGX 235,000 is tax-exempt.
• Income between UGX 235,001 and UGX 335,000 is taxed at 10%.
• Income between UGX 335,001 and UGX 410,000 is taxed at 20%.
• Income above UGX 410,000 is taxed at 30%.
• For monthly earnings exceeding UGX 10,000,000, an additional 10% surcharge is applied on the amount above that threshold.

Payroll Process: Employers must process payroll in compliance with Uganda’s tax and labor laws, including:

• Deducting PAYE, NSSF, and other applicable levies from employee wages.
• Submitting monthly remittances to the URA and the NSSF by the 15th of the following month.
• Issuing payslips to employees showing gross salary, deductions, and net pay.
• Filing annual returns with both the URA and the NSSF.

Payment Frequency: Employees are typically paid monthly, although some may be paid biweekly or weekly, depending on industry standards and employment contracts.

Minimum Wage: As of now, Uganda does not have an officially enforced national minimum wage. Wages are often determined through individual or collective employment contracts, but the government has expressed interest in reviewing and updating minimum wage policies.

Bonuses and Allowances: Bonuses are not mandated by law and are typically performance-based or included as part of contractual agreements. Allowances (e.g., transport, housing, or lunch) are often provided depending on the employer’s policies and the employee’s job grade.

Employment, Payroll, and Tax Policies – Uganda

Employment Laws: Employment in Uganda is governed primarily by the Employment Act, 2006 and other associated labor regulations. These laws define the minimum rights and responsibilities of employers and employees, and they apply to both local and foreign workers employed within the country.

Working Hours and Overtime: The standard working week consists of 48 hours, typically spread over six days (eight hours per day). Any work exceeding these hours qualifies as overtime, which should be compensated at a higher rate, usually:

• 150% of the regular hourly rate for weekdays.
• 200% of the hourly rate for work done on public holidays or rest days.

Employees are entitled to a minimum of one rest day per week.

Employment Contracts: All employees must have a written employment contract, clearly stating:

• Job title and description
• Salary and benefits
• Working hours
• Leave entitlements
• Termination procedures

Contracts can be for a fixed period, permanent, or based on specific tasks. Employers must provide a contract within four weeks of employment commencement.

Leave Entitlements: Employees in Uganda are entitled to the following statutory leaves:

• Annual Leave: At least 21 working days of paid leave after 12 consecutive months of service.
• Sick Leave: Up to 30 days of paid sick leave per year, upon presenting a medical certificate.
• Maternity Leave: 60 working days of fully paid leave for female employees. The employer may not terminate employment due to pregnancy.
• Paternity Leave: Male employees are entitled to four working days of paid paternity leave per year.
• Public Holidays: Uganda observes 12 national public holidays, during which employees are entitled to paid leave.

Statutory Benefits, Payroll, and Tax Overview

Employer Contributions: Employers are responsible for making the following contributions:

• National Social Security Fund (NSSF): 10% of the employee’s monthly gross salary.
• Pay-As-You-Earn (PAYE): Deducted from employee wages and remitted to the Uganda Revenue Authority (URA) according to income tax brackets.
• Local Service Tax (LST): Deducted annually (varies by municipality and employee earnings).
• Skills Development Levy: Required for certain sectors to support vocational training.

Employee Contributions

• Employees contribute 5% of their gross salary to the NSSF, which is withheld by the employer and submitted with the employer’s portion.

Taxation of Employment Income: Uganda uses a progressive tax system on employment income:

Payroll Process: Employers are required to:

• Calculate and deduct PAYE, NSSF, and other levies monthly.
• Submit remittances to URA and NSSF by the 15th of the following month.
• Provide employees with detailed payslips.
• File annual returns with URA and NSSF.

Payment Frequency: Most employees are paid on a monthly basis, although some industries may adopt biweekly or weekly payment structures.

Minimum Wage: Uganda does not currently enforce a national minimum wage. Salaries are set through mutual agreement between employers and employees, often guided by collective bargaining or sector standards.

Bonuses and Allowances: Bonuses are not a legal requirement but may be provided based on performance, company profits, or contract terms. Common allowances include:

• Transport
• Housing
• Meals or lunch stipends

Termination of Employment: Employment contracts can be terminated under the following conditions:

• By Notice: Either party may end the contract by giving written notice as defined in the contract (minimum ranges from 7 days to 1 month depending on tenure).
• Summary Dismissal: Immediate termination is allowed for cases of gross misconduct, such as fraud or serious negligence.
• Redundancy: When the role becomes obsolete, the employer must follow fair procedures, including notice to the labor officer and payment of severance (if applicable).

Severance Pay: Severance is paid only under specific circumstances, such as:

• Termination due to retrenchment or redundancy
• Illness or injury making the employee unfit for work
• Death of the employee

The amount varies depending on the employment contract and years of service, and it is negotiated between the employer and employee or as provided in collective agreements.