Uganda is famous in East Central Africa for its various ethnic groups and cultural heritage. The country is strategically located near Kenya, Tanzania, and Rwanda, allowing access to the enormous consumer base. Uganda’s location also provides regional trade and investment opportunities to companies that establish business entities here.
Agriculture is the heart of Uganda’a economy and is the primary source of employment there. Uganda is promoting agriculture business and is constantly driving to create better job opportunities in the sector. The Ugandan government is putting in much effort to uplift the economy and create more employment opportunities. This is primarily driven by a boost in Foreign Direct Investment (FDI) and the government’s announcement of a Final Investment Decision (FID).
Companies can set up a business in Uganda and take advantage of its highly skilled and talented workforce. When drafting an employment contract for new hires, employers must consider the employment act in Uganda. Here is a guide to walk you through the labor laws in Uganda, which can increase your chances of expanding your business there.
Applicability of the Act
The Uganda Employment Act applies to all employees, irrespective of nationality that the employers hire under the service contract. However, Uganda labor laws are not applicable in a family business where the family members and relatives are the only employees and employers. The maximum number of family members must not exceed five. Also, the defense forces in Uganda do not fall under this act as it is limited to civilians only.
Employment and labor laws in Uganda can be classified into three types of employment contracts, which are as follows:
Express term contracts
This type of employment contract is one where the employer and the employee agree upon certain conditions to become binding upon both parties. However, section 25 of the Employment Act 2006 states that the service contract can be written and oral. A labor officer or a magistrate must attest to the service contract to make it valid.
According to section 59 of the Act, the express term contracts must contain the following essentials:
- The name and residential address of the employer and employee
- Date of commencement of employment contract
- Job position and description
- The place where the employee must carry out his duties
- Salary of the employee
- Daily walking hours of the employee
Fixed term contracts
Fixed-term employment contracts are standard in Uganda. Labor laws in Uganda follow fixed-term contracts there, and an employer hires employees for a specific period. After the expiry of such time, the contract automatically extinguishes, and the employment term ends.
A fixed-term contract includes the following essentials:
- Details about the type of employment
- The working hours specified by the employer
- Salaries and perks of the employee
- Uniform and disciplinary actions
- Paid leaves in the term of employment
- Health and safety of the employee
- Specification of the date of commencement of employment and the end date
Indefinite period contracts
Indefinite period contracts are governed by the employment law Uganda guide, where the employment continues until the employer or employee takes action to end the arrangement. These are open-ended contracts, and the employees work in the organization indefinitely. These contracts are generally made to create permanent employment for specific positions in a company.
Key Provisions of the Act
The critical provisions of the Employment Act Uganda are listed below
Minimum age of employment
- According to the Employment Act Uganda 2006, the minimum age of workers or employees working commercially is 16 years.
- Children over 14 years can also be employed but only for light work under the supervision of an adult over 18. The work timings and job profiles should not disturb the child’s employment.
- According to the employment act 2006 and labor laws in Uganda, the standard working hours of an employee is a maximum of eight hours per day and 48 hours a week.
- Including lunch and worship time, the working hours can be nine hours daily.
- If the employees work more than the standard time, overtime compensation is considered.
- Employees are entitled to one and a half times the standard hourly wage.
- The working hours in Uganda labor law permit an employee to receive overtime pay double the standard hourly wage rate for working overtime on public holidays.
- Employees who work 16 hours a week or more are entitled to 21 paid leaves per year.
- The vacation leave in Uganda can be taken for a maximum of seven days in a continuous period of 4 months.
- However, to be eligible for vacation leave, the employee must complete 12 months of service in that company.
- The labor code of Uganda provides the facility of vacation leave before the commencement of the service contract. Additional 24 hours of leave can be granted to the employees after the commencement of the employment contract.
- As per Uganda’s paid maternity leave policy, female employees are entitled to 60 days of maternity leave.
- The female employee has to give a notice asking for maternity leave.
- The organizations in Uganda have to provide four months of compulsory maternity leave to female employees after childbirth or in case of miscarriage.
- If the employer wants an authentic medical certificate, the employee can ask for the same.
- If there is any sickness in the mother or the baby during pregnancy, the maternity leave in Uganda for foreigners and nationals can be extended to 20 working days. No pay cut is done during this time, and the employee receives the full payment.
- According to the labor act rules in Uganda, male employees are eligible for paternity leaves.
- Male employees who have become fathers can take paternity leave for four working days.
- For the first month of sick leave, employees will receive a full salary and other benefits associated with the employment contract.
- However, if the sick leave continues even after a month, the employee shall not receive any salary or benefits from the employer.
- The total number of sick leaves an employee can take is 30 calendar days with full pay.
- Additionally, per the employment law Uganda guide, the employer also has the authority to terminate the employment contract if the worker’s sickness continues after the expiration of the first month.
Dismissal of employees
According to the labor act rules in Uganda, employment dismissal can happen on the following grounds:
- When the employee has broken any rules of conduct or obligations that one must fulfill as per the contract of service.
- When the employee has committed any offense, and the employer has proved it beyond a reasonable doubt.
However, the alleged employee shall be given a fair chance to prove his defense against any allegations that result in dismissal.
The employment termination must be followed with a notice period. Uganda employment law for termination has the following essentials to fulfill:
|Duration of employment||Notice period|
|More than 6 months and less than a year||2 weeks|
|More than a year to 5 years||1 month|
|5 years to 10 years||2 months|
|More than 10 years||3 months|
- In case of unfair dismissal, an employee who has worked there for at least six months is entitled to severance pay. However, the amount of the severance pay can be decided after the negotiation between both parties.
- According to the labor act rules in Uganda, if there is no such negotiable agreement, then a labor officer shall decide the severance pay amount.
If an employee breaches an employment contract, which is against the Employment Act Uganda, the employer will face serious consequences, which can be explained as follows:
- The employer can be sued for damages, and the amount may vary with the degree of the offense.
- The employees can terminate the contract of their will without serving a note experience or paying any penalty.
- Any contract provisions, especially those related to trade restrictions, can be deemed unenforceable.
Compliance Strategies for Employers
To navigate through labor laws in Uganda and comply with them, companies can follow the following compliance strategies:
- Hire an HR Manager or an EOR/PEO to handle the area of employee onboarding, payroll, benefits, legal compliance, and related areas.
- Construct and draft company rules, policies, and regulations in writing. Also, evaluate company policies occasionally and consider making necessary changes.
- Foster and reinforce compliance culture by conducting routine training procedures for essential matters of the organization.
- Consider incorporating third-party compliance solutions and audits for enhancing organizational procedures.
How Can Multiplier Help?
Multiplier can assist new business owners with various solutions to make them stand in the global market. Our team of experts provides services like hiring and employee onboarding, drafting multilingual contracts, international payroll management, etc. With Multiplier, business owners can enter new markets, experience growth and do away with the challenges of starting a business abroad.