Uganda: A Guideline to Payroll and Employer of Record

Establish your presence globally with Neeyamo as we help you go beyond borders to manage your international payroll and hire new talent in Uganda.

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Overview

Uganda is in the African Great Lakes region, lies within the Nile basin, and has a varied but generally modified equatorial climate. The major industries are processing agricultural products such as tea, tobacco, sugar, coffee, cotton, grains, dairy products, and edible oils. Also important are beer brewing and cement manufacturing, fertilizers, matches, metal products, paints, shoes, soap, steel, textiles, and motor vehicles.

Neeyamo assists in onboarding and managing employees in Uganda and processing a firm's payroll, compliance, benefits, and more.

Tools And Instances

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Global Payroll

Neeyamo’s global payroll solution covering 180+ countries

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Global Work

A tech-based EOR solution to manage your extended workforce

Facts And Stats

Capital

Kampala

Currency

Ugandan Shilling

Official Language

Swahili, English

Fiscal Year

1 July - 30 June

Date Format

DD/MM/YYYY

Country Calling Code

256

Other Languages

Bantu, Central Sudanic, Nilotic

Time Zone

UTC +03:00

Global Payroll

Overview

Handling payroll for a widespread workforce can pose a significant challenge for any organization, and the added complication of compliance can make things worse. If companies spend more time processing payroll, it directly impacts day-to-day operations and their overall productivity.

Over the years, Neeyamo has observed these complexities and strived to provide a global payroll solution through a single technology platform - Neeyamo Payroll

Payroll Taxes

Payroll tax is the percentage amount retained from an employee's salary and paid to the government to invest in the general population's welfare. These are statutory in nature and are levied from both the employer and employee. Additional statutory contributions are made by employers towards aiding both short-term and long-term benefits for their employees.

Employee Taxes

An individual in employment is obligated to contribute 5% of one’s gross earnings to the national social security fund.

The income tax bracket is as follows:

Up to 2,820,000 UGX 0%
2,820,001 - 4,020,000 UGX 10%
4,020,001 - 4,920,000 UGX 20%
4,920,001 - 120,000,000 UGX 30%
Over 120,000,001 UGX 40%

Employer Taxes

Employers contribute 10% toward the National Social Security Fund. However, they can also pay the complete 15%, including 5%, on behalf of employees.

Payroll Cycle

Overview

Undoubtedly, payroll is a critical process for any organization. Pay cycle refers to the period for which an organization pays its employees, and this can vary depending on the pay frequency that the organization chooses to adopt.

Frequency

If a worker is hired for a day, he is to be paid wages at the end of that day. Similarly, if he is hired for a week, he should be paid wages at the end of that week. Employees who are engaged to be paid fortnightly or monthly must be paid wages at the end of each fortnight or month. Similarly, an employee engaged to be paid for a piece of work done or by results must be paid by intervals of not more than one fortnight.

13th Month Cycle

There is no statutory requirement to pay the 13th or the 14th month salary.

Global Work

Overview

An Employer of Record (EOR) service provider helps you eliminate the hassle of handling complexities while onboarding a new employee in an international location. They help bridge the gap that otherwise mandates organizations to have a local registered entity and a local bank account, prior to making a job offer to an international hire.

An EOR service provider acts as a legal employer, facilitates salary payments, and manages other statutory requirements such as health insurance, payroll taxes, and employee benefits ensuring compliance with local tax laws and regulations.

This allows organizations to focus on collaborating with the employee in Uganda for operational tasks, with the knowledge that they have a cost-effective solution support their global payroll and HR requirements, as they continue their global expansion.

HR Mandates and Practices

Minimum Wage

The current minimum wage in Uganda is UGX130,000 per month.

Overtime

Working hours shall not exceed 48 hours per week; any extra hours shall be deemed overtime.

Data Retention Policy

As a general rule, the Act does not set a duration for the retention of data. However, it stipulates that personal data should not be retained for a period longer than is necessary to achieve the purpose for collection or processing of the data unless (Section 18 of the Act):

  • the retention of data is required or authorized by law (e.g., the Anti Money Laundering Act, 2013 sets ten years as the duration for retention of records);
  • the retention is necessary for a lawful purpose related to the function/ activity for which the data is collected or processed;
  • a contract between parties requires the retention; or
  • the data subject consents to the retention of the data.

Hiring and Onboarding Requirements

Hiring

 

In accordance with Article 21 of the Constitution of Uganda, all human beings are equal before the law, and during and after the hiring process, you need to follow Uganda's employment compliance laws. While recruiting, you cannot discriminate against no person can be discriminated against on any ground, including sex, race, color, ethnic origin, tribe, birth, creed or religion, social or economic standing, political opinion, or disability.

The Employment Act also prohibits discrimination based on sex, race, color, religion, political opinion, national extraction or social origin, HIV status, or disability. Any distinction, exclusion, or preference regarding a particular job based on the inherent requirements of that particular job is not, however, considered discrimination.

Per the provisions of the Persons with Disabilities Act 2019, employers cannot discriminate against any person on the ground of a disability in all employment-related matters, including hiring, remuneration, promotion, and termination of the contract. Employers are further required to facilitate persons with disabilities in work through "reasonable accommodation".

Onboarding

Following are required during onboarding:

  • Candidate personal information (only necessary information) 

  • National Id 

  • Copy of qualifications and references, and resumes 

  • Copy of Passport 

  • Clearance letter from Interpol or home country 

  • Work permit

Probation

A probationary period of service should not exceed six months in the first instance but may be extended for a subsequent period of not more than six months with the employee's agreement.

An employee should not be employed for a probationary period of service by the same employer more than one time unless engaged for work of a different character.

Leave

National Holidays

The following public holidays are observed in Uganda:

  • Jan. 1: New Year’s Day
  • Jan. 26: NRM Liberation Day
  • Feb. 16: Archbishop Janani Luwum Day
  • Mar. 8: International Women’s Day
  • Apr. 7: Good Friday
  • Apr. 9: Easter Sunday
  • Apr. 10: Easter Monday
  • Apr. 21: Labor Day
  • May 1: Eid-Ul-Fitr
  • Jun. 3: Martyr’s Day
  • Jun. 9: National Heroes’ Day
  • Jun. 28: Eid Al Adha
  • Oct. 9: Independence Day
  • Dec. 25: Christmas Day
  • Dec. 26: Boxing Day

Annual Leave

Annual leave for all workers on completing at least six months of service. A worker working weekly for sixteen or more hours is entitled to 21 paid annual leave at the rate of 7 days for each period of continuous four months of service on completion of 12 months of continuous service.

Sick Leave

An employee who has completed at least one month's continuous service with an employer and is incapable of working because of sickness or injury is entitled to sick pay. For the first month, the employee is entitled to full wages and every benefit. And after that, the next month with half pay.

Maternity Leave

A Female employee in Uganda is entitled to 60 working days of fully paid maternity leave. After childbirth or miscarriage, the employee gets a compulsory leave of 4 weeks.

Paternity Leave

A male employee shall, immediately after the delivery or miscarriage of a wife, have the right to a period of four working days' leave from work yearly, herein referred to as paternity leave.

Termination

Notice Period

The length of the notice period depends on the length of the contracts follows:

  1. Not less than two weeks, where the employee has worked for more than six months but less than one year.
  2. Not less than one month, where the employee has worked for more than twelve months but less than five years.
  3. Not less than two months, where the employee has worked for more than five but less than ten years.
  4. Not less than three months, where the employee has worked for ten years or more.

Severance Pay

There is a provision in the law regarding severance pay, but this compensation is subject to negotiation between the employer and the worker. Severance pay is entitled to the worker after continuous service (of a particular employer) for at least six months. It is due in the following circumstance:

  • Unfair dismissal of the worker by the employer.
  • Death of the worker at work, not attributable to any worker misconduct.
  • Termination by the worker due to physical incapacity not attributable to any misconduct.
  • Termination because of the death or insolvency of the employer.
  • Termination by a labor officer following the employer's inability or refusal to pay wages.
  • Other cases as provided by the Minister.

No severance allowance is paid when an employee is summarily dismissed with justification, when an employee is first dismissed but later is offered reemployment which they unreasonably refuse, and in cases where the employee abandons his employment and absconds the workplace for more than three days without any explanation given to the employer. Severance pay is also not payable on the termination of the probationary contract.

The amount of severance pay is negotiable between the employer and the worker or the labor union that represents them.

Visa

Types of work visas

Any foreign national who plans to travel to Uganda for work will need a work permit. This requirement applies to paid employment as well as volunteer work. Foreign workers should carefully choose the right type of work permit before beginning the application process. The work permit categories for foreigners in Uganda include the following:

  • Class A and A2: These work permits are available to government and diplomatic services workers and government contractors.
  • Class B: Foreign nationals who plan to invest in the Ugandan agricultural industry should apply for this work permit.
  • Class C: This permit applies to foreign nationals who plan to invest in the mining industry.
  • Class D: This work permit is for applicants who plan to conduct business or trade in Uganda.
  • Class E: Manufacturers who plan to invest in a manufacturing business or establish a new one in Uganda should apply for this work permit category.
  • Class F: This permit applies to working professionals who intend to travel to Uganda to practice their profession.
  • Class G1 and G2: These work permits apply to missionaries, volunteers, and foreign individuals who work for non-governmental organizations (NGOs).
  • Class G2: Issued to foreign expatriates employed in Uganda, including salaried NGO employees.

Requirements

  • Valid Passport (bio-data page)
  • Recent Passport Size Photograph
  • Covering letter from the Agency
  • Valid Clearance letter from Interpol/ valid police clearance from the home country
  • Valid Tax Clearance Certificate
  • Current immigration status
  • Appointment letter from the organization
  • Certified copy of Qualifications (graduate certificate)
  • Proof of failure to employ a qualified Ugandan
  • List of employees in the organization indicating nationality and position held.

Foreign employees who plan to travel to Uganda with a work permit can bring family members along. Still, they must provide additional documents with their application if they choose to do so. Additional requirements may include marriage or birth certificates for accompanying family members.

Foreign employees should also be aware that Ugandan work permits are employer-specific. Employees must apply for a new work permit if they change jobs in Uganda.

Employee Background Checks

Legal and Background Checks

Permissible Criminal and credit reference checks are permitted. Reference and education checks and medical examinations are common and permissible.

Last updated on April 30, 2023

If you have any queries or suggestions, reach out to us at irene.jones@neeyamo.com

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