Hire employees in Uganda
What a foreign company needs to know before employing people in Uganda in 2026: whether you need a local entity, what the 10% employer NSSF contribution costs, how the new PAYE bands from July 2026 work, and how the Employment (Amendment) Act 2025 changed sick pay, dismissal procedure and severance. Written for CHROs, CFOs, General Counsel and founders.
Employer of record in Uganda: quick answers
The questions leadership teams ask first.
Do I need a local entity in Uganda to hire?
No. There are three routes:
- Employer of Record. Dryft Global employs the person through a compliant Ugandan employer registered with the Uganda Revenue Authority (URA) and NSSF, issues the written contract, and runs PAYE and NSSF. You direct the work.
- Direct local entity. You incorporate with the Uganda Registration Services Bureau (URSB), then register with the URA, NSSF and the Personal Data Protection Office before the first payroll.
- Independent contractor. Lawful only for a genuinely independent business. A full-time worker under your direction is an employee whatever the contract says.
When should I use an EOR instead of registering locally?
Use an EOR for your first hires and for engineering, support or NGO teams of up to about 50 people. You start in days and avoid incorporation, tax and NSSF registrations. Your own entity earns its keep for a long-term presence or when you will sell into the Ugandan market.
What does an employee actually cost beyond salary?
Less than in most markets. The only statutory employer contribution is 10% NSSF on total gross pay, with no ceiling. Customary private medical cover brings the all-in figure to about 13%. Since statutory severance arrived in June 2026, many employers also accrue about one twelfth of salary, which takes the burden to about 22%.
How difficult is termination in Uganda?
Harder than before June 2026. Notice runs from two weeks to three months by service. Before dismissing for misconduct or performance, the employer must hold a fair hearing with five working days' preparation, or pay a fixed four weeks' net pay penalty. Severance of at least one month's salary per year of service is now statutory on redundancy and unfair dismissal, and any redundancy needs 30 days' notice to the Commissioner for Labour.
Can Dryft Global legally employ my team in Uganda?
Yes. Dryft Global acts as the legal employer in Uganda. We issue written contracts under the Employment Act, register employees with NSSF, withhold PAYE under the July 2026 bands, remit both by the 15th, file Class G2 permits for foreign staff, register with the Personal Data Protection Office, and run hearings, notice and severance under the 2025 amending Act.
Hiring routes compared
Speed, local registration, tax administration and liability differ by route.
| Factor | Direct local entity | Dryft Global EOR | Independent contractor |
|---|---|---|---|
| Time to operational state | Several weeks | Days to 2 weeks | Days |
| Local entity required | Yes, URSB, URA and NSSF registration | No | No |
| PAYE and NSSF | Your URA and NSSF files | Handled by Dryft Global | Contractor self-reports |
| Statutory liability | Direct corporate exposure | Assumed by Dryft's local employer | High if reclassified |
| Best fit | Long-term presence, local sales | Teams of 1 to about 50 | Discrete project work |
What an employee costs in Uganda
Uganda has one statutory employer contribution, 10% NSSF on total gross pay. The model below is a Kampala software engineer on UGX 6,000,000 a month in 2026/27.
| Component | Employer share | Notes |
|---|---|---|
| NSSF | 10% | On total gross pay, no ceiling; employee pays 5% |
| Statutory subtotal | 10% | UGX 600,000 a month on the model salary |
| Private medical insurance | ~3% | Typical budget around UGX 200,000 a month |
| Severance accrual | ~8% | Optional provision for statutory severance of 1 month per year |
| Total employer on-cost | ~10% to 22% | Above base salary on the model salary |
For an employee on UGX 6,000,000 a month, budget roughly UGX 79.2 to 81.6 million a year before any severance accrual and the EOR fee, about USD 18,000 to 18,500 at UGX 4,400 to the dollar. The shilling moved sharply in October 2026, so ask us for a cost model with current rates applied.
Payroll and tax
Salaries are paid monthly in shillings with an itemised pay statement. NSSF contributions (10% employer, 5% employee) and the PAYE return and payment are both due by the 15th of the following month. Late NSSF attracts a 10% surcharge plus 10% for each further month, and an employer that fails to withhold PAYE is personally liable for it. Local Service Tax, up to UGX 100,000 a year, is deducted in four instalments from July to October.
Progressive PAYE, new bands from July 2026
Under the Income Tax (Amendment) Act 2026, from 1 July 2026 the first UGX 335,000 a month is tax free for residents, then rates step through 20%, 25% and 30%, with an extra 10% on income above UGX 10 million a month, a top rate of 40%. The old 10% band is gone. Non-residents use a separate schedule with no tax-free band. On UGX 6,000,000 a month, PAYE is UGX 1,688,250 and net pay about UGX 4,011,750.
Statutory minimum wage
The only gazetted national minimum wage is UGX 6,000 a month, set in 1984 and never updated, and no sector minimums have been gazetted. The 2025 amending Act did not set a new figure. Pay is set by contract and market rates.
Leave and mandatory benefits
- Annual leave. 7 days on full pay for each 4 months of continuous service, which is 21 days a year, plus public holidays.
- Public holidays. 13 recurring holidays a year, including the Eid holidays, which follow the lunar calendar, plus any one-off days the government declares.
- Sick leave. Since June 2026, up to 6 months: 2 at full pay and 4 at half pay. Employment can end for sickness only after 6 months, with a doctor's opinion.
- Maternity. 60 working days on full pay, at least 4 weeks after the birth. Dismissal for pregnancy is prohibited.
- Paternity. 4 working days a year on full pay.
- Breastfeeding and childcare. Employers must now provide time and space for breastfeeding; detailed standards are to follow by regulation.
- Working time. Up to 48 hours a week. Overtime at 1.5 times on normal days and 2 times on public holidays.
- Harassment. Every employer, whatever its size, must put in place and display sexual harassment prevention measures.
Termination and notice periods
Probation can last up to 6 months, extendable once with consent, and either side ends it with one month's notice. After that, termination needs a lawful ground, a fair hearing and notice by length of service.
| Situation | Requirement |
|---|---|
| Service over 6 months, under 1 year | 2 weeks' notice |
| 1 to under 5 years | 1 month's notice |
| 5 to under 10 years | 2 months' notice |
| 10 years or more | 3 months' notice |
| Redundancy | 30 days' notice to the Commissioner for Labour, consultation, statutory severance |
- Fair hearing. Explain the reasons, allow a companion and give 5 working days to prepare. Skipping it costs a fixed 4 weeks' net pay.
- Statutory severance. At least 1 month's salary per completed year of service, after 6 months' service, on redundancy, unfair dismissal, incapacity, death and the other listed events.
- Unfair dismissal. Complaint to a Labour Officer within 3 months. Reinstatement is the default; otherwise a basic award of 8 weeks' wages plus 1 to 3 months' compensation.
- Written reasons. The employer must give reasons for any dismissal.
Can I use independent contractors?
Only where the person genuinely runs their own business: their own clients, schedule and tools, invoicing for output rather than a fixed monthly fee. Courts look at control and integration, not the label. Misclassification brings back NSSF at 15% with surcharges, unremitted PAYE with penalties, and claims for notice, statutory severance and unfair dismissal awards. Casual engagement is now capped at 6 continuous months. The 2025 amending Act also requires recruitment agencies to be licensed; how that applies to an employer of record is a structuring point to confirm for each engagement. For anyone who works like an employee, an EOR is the compliant route.
The legal framework in brief
Uganda is a common law system with one national employment statute, substantially updated in 2026. The instruments you will hear most:
- Employment Act (Cap. 226) and the Employment (Amendment) Act 2025. Contracts, hours, leave, termination, fair hearings, statutory severance and Labour Officer complaints. The amendments took effect in June 2026.
- National Social Security Fund Act (Cap. 230). 10% employer and 5% employee on total gross pay, compulsory for all employers since 2022.
- Income Tax Act as amended in 2026. New resident PAYE bands from 1 July 2026, top rate 40%.
- Data protection. Data Protection and Privacy Act 2019: registration with the Personal Data Protection Office, renewed annually, including for offshore processors.
- Immigration and right to work. Class G2 entry permits from the Directorate of Citizenship and Immigration Control, plus NIRA alien registration since June 2026.
- Authorities. Ministry of Gender, Labour and Social Development, Labour Officers, the Industrial Court, URA, NSSF, the Immigration Directorate and the PDPO.
Where the talent is
Uganda's 2024 census counted 45.9 million people, about half of them under 18, which makes it one of the youngest workforces in the world. Unemployment was 12.2% in the 2025 Labour Market Survey, and most jobs are still informal, so formal professional roles attract strong applicant pools. English is the language of business and law, and Swahili is also official. Time is East Africa Time (UTC+3) all year, which overlaps the European working day and the US East Coast morning. Uganda is a member of the East African Community.
| Region | Talent and industry concentration |
|---|---|
| Kampala | Technology, finance, telecoms, NGOs and regional offices |
| Entebbe | International airport, government and aviation services |
| Jinja | Manufacturing and agro-processing |
| Mbarara | Western commercial centre and university town |
Uganda Implementation Kit
This page tells you the rules. The kit tells you what to do, in what order, and what goes wrong when you skip a step.
- Step-by-step checklist, from route selection to first payroll
- Written contract and particulars checklist under the Employment Act
- NSSF and URA registration sequence with the monthly calendar
- PAYE worksheet with the July 2026 bands and Local Service Tax schedule
- Class G2 permit and NIRA alien registration planner
- Fair hearing, notice and statutory severance pack under the 2025 amendments
- Every official Ugandan authority with direct links
Hiring in nearby markets
Employer of record and hiring guides for other countries in Middle East and Africa: the United Arab Emirates · Algeria · Angola · Bahrain · Benin · Botswana · Côte d'Ivoire · Egypt. See all global hiring guides or compare routes in EOR vs PEO vs entity.
This guide is general information, not legal, tax or immigration advice. PAYE bands changed on 1 July 2026, the Employment (Amendment) Act 2025 took effect in June 2026 with implementing regulations still to come, and the shilling moved sharply in late 2026. Confirm current figures with a qualified adviser or with Dryft. Last reviewed November 2026.
Ready to hire in Uganda?
Tell us who you want to hire and where they sit. You will get a cost model and a compliant route within a day, from a person who has done this before.