How to Hire Remote Employees In 

Uganda

The Basics

Currency
Ugandan shilling
Employer Taxes
15%
Payroll Frequency
Monthly
Official Language
Swahili/English

Employment in 

Uganda

Hire Independent Contractors

Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.

For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.

For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.

As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.

While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.

Benefits of Hiring Independent Contractors
Reduced overhead: Lower cost in expenses, payroll, benefits, and more.
Greater flexibility: Contractors can be brought on as-needed. If not a good fit, you simply don’t have to move forward with the contract.
Reduced legal risk: Contractors aren’t usually protected by employment anti-discrimination and workplace safety laws.
Disadvantages of Hiring Independent Contractors
Risk of Misclassification: Not only does this deny workers their proper protections, it can also result in steep penalties and damage to your company. If the IRS determines that employee misclassification has occurred, you will be liable for a percentage of the employees wages, FICA contributions, penalty fines, unpaid taxes, up to a year in prison, and more.
Lack of Control: Contractors are drawn to being independent because it gives them greater control over the work they perform and who they work with. Because they’re not employees, you can’t tell them what to work on and how it should be done.
Lack of Loyalty: Contractors come and go as-needed. Many companies hire contractors for short-term work, which makes it difficult to cultivate loyalty.
Increased Scrutiny: Using Independent Contractors typically leads to an increased risk of being audited.

Set up a subsidiary in 

Uganda

A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.

Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Uganda can be expensive, stressful, and time-consuming. It's not for the faint of heart.

To set up a subsidiary in Uganda, you have to:

  1. Register your business name and file articles of incorporation
  2. File for local bank accounts
  3. Learn and keep track of the local employment laws
  4. Set up local payroll
  5. Hire local accounting, legal, and HR people

If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Uganda.

Use an Employer-of-Record (EOR)

An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.

An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.

Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.

At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.

Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:

  • Ability to attract talented and motivated employees from all over the world.
  • Full legal compliance: There is no risk of violating local employment laws.
  • Transparency: Employees are still your employees. All the work, processes, operations and day-to-day business belong to you, the company, just like with any other employee. Panther just takes on all of the responsibilities, obligations and admin work related to your team's employment.
  • No risk of misclassification

Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.

Paying Remote Employees

Paying employees in Uganda is not the same as paying workers in your own country. Employees have to be paid using Uganda’s employment and payroll standards.

This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.

Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.

After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:

Pay through a local entity

One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.

Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.

Work with an EOR

Outside of EORs acting as the full admin employer, many also provide remote payroll.

For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.

We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.

Uganda

 Specific Information

Working Hours

Normal working hours are 8 per day and 48 per week.

Overtime

Workers may be required to work overtime, provided that total working hours, inclusive of overtime, must not exceed 10 hours per day or fifty-six hours per week except when persons are employed in shifts.

Payroll Tax

Employer

Employer

  • National Social Security Fund(NSSF)

Minimum Wage

Minimum Wage in Uganda is 6,000 Ugandan shillings per month for all workers.

Payroll

Pay Cycle

The Employment Act, 2006 regulates the payment of wages to all classes of workers. The Act requires an employer to make timely payment of remuneration to the employees.

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.

An employee who is engaged to be paid on fortnightly or monthly basis must be paid wages at the end of each fortnight or month.

13th Salary

There are no statutory 13th or 14th month payment in Uganda. (There are some large companies that pay 13th cheque payments, reflecting the 13th month salary or Christmas bonus: This bonus is usually paid at the end of the year and is a form of acknowledgement and appreciation for excellent service rendered).

Leave

Paid Time Off (PTO)

A worker, working weekly for sixteen or more hours, is entitled to 21 working days paid annual leave at the rate of 7 days for each period of continuous 4 months of service on completion of 12 months of continuous service.

The time to take annual leave has to be agreed between the parties.

Public Holidays

There are 18 public holidays. Public holidays that occur on a weekend remain on that date.

Sick Days

An employee who has served at least one month of continuous service is entitled to sick leave

  • Two months in any one calendar year one month on full pay and one month with no pay.
  • The employer may require a medical certificate from a qualified medical practitioner before granting sick leave or at the earliest opportunity but the sick must be supported a sick off certificate issued by a qualified medical doctor.
  • For the first month’s absence from work he or she is entitled to full wages and every other benefit for the first month and nil salary and benefits in the second month.
  • If at the expiration of the first month the sickness of the employee still continues, the employer is entitled to terminate the contract of service on complying with all the terms of the contract of service

Maternity Leave

A female employee who has a valid contract of service is entitled to maternity leave. The law does not provide a minimum period of service to qualify for maternity leave.

The female employee Shall have the right to a period of sixty working days leave from work of which at least four weeks shall follow the childbirth or miscarriage. A female employee shall be entitled to full pay during maternity leave.

Paternity Leave

Private sector employees are not entitled to receive paternity leave.  

Parental Leave

A male employee whose official spouse gives birth shall be entitled to paternity leave.

The employee shall be entitled to four (4)working days Leave yearly.

Other Leave

No Info.

Marriage Leave

Marriage Leave - 14 days

Bereavement Leave

A worker can receive a maximum of 14 days’ leave per year for bereavement due to death in the family, illness of family.

Termination

Termination Process

An employment contract can be terminated at the end of the contract term (if for a fixed period), by the employer with notice, or by the employee with or without notice.

An employer can dismiss an employee without notice if the employee has fundamentally broken their obligations under the employment contract. Otherwise, the employer must provide the employee with notice.

Notice Period

The notice period is between two week and three months depending on the employee’s length of service.

The employer shall pay severance allowance where an employee has been in his or her continuous service for a period of 1 year or more and the severance allowance shall be paid to the employee within twenty-one days from the date of expiry or termination of the contract of service.

Severance Pay

Severance pay shall be at the minimum the employee's one-month gross salary at the date of termination per year worked.

Probation Period

The maximum period of probation in Uganda is 6 months but which can be extended in writing to one year giving reasons for the extension