Uganda: Significant changes to employee entitlements and employment policies

Employer action code: Act

Amendments to Uganda’s Employment Act introduce new provisions covering sick leave, severance pay and support for working parents, as well as tighten dismissal and termination procedures, among other things. The amendments are aimed at modernizing employment practices and aligning with international labor standards. The act was approved by the president in April and published in the official gazette, taking effect June 5, 2026.

Key Details

Notable aspects of the Employment (Amendment) Act include:

• Increased sick leave: Sick leave increased from two to six months per year, paid by the employer in full for the first two months (previously one month) then 50% of pay for the next four months. After six months (previously two months), the employment contract may be terminated, subject to confirmation by a medical doctor of the employee’s inability to return to work
• Breastfeeding and childcare facilities: All employers must provide the necessary time, space or facility for nursing mothers and daycare for the children of employees, ages three months to 36 months. The government is expected to provide operational standards for employers
• Termination of employment: The act now makes clearer distinctions between termination and dismissals. Grounds for terminating employment have been expanded to include redundancy, long-term sickness and situations where continued employment would breach a legal obligation. Redundancies for reasons such as workplace reorganization, introduction of labor-saving technology and changes in work patterns must be justified; employers are now required to notify the Labor Commissioner of any intended redundancies at least 30 days prior to the planned termination date (a requirement that previously only applied where more than 10 employees were impacted)
• Dismissals: A new section (64A) formalizes statutory grounds for dismissal, complemented by new provisions on summary dismissal as well as unfair and wrongful dismissals. Pre-dismissal hearings are now mandatory. Before dismissing employees, employers must explain the reasons for dismissal and provide five working days for employees to respond. Dismissal outside the grounds covered in section 64A is considered unfair. The basic compensatory order for unfair dismissal increased from four to eight weeks' wages 
• Severance pay: The calculation of severance pay has been formalized at one month's salary for each year worked, replacing the prior standard under which severance was payable on dismissal but the amount payable was negotiable, with no minimum statutory standard 
• Probationary period: The pay in lieu of notice requirement for employers to end probationary employment early increased from seven days to one month’s pay. In addition, in circumstances where an employer does not formally end probationary employment after the trial period ends but continues to pay the employee, the employee will be now deemed to be a permanent employee
• Temporary workers/agencies: Temporary workers and agencies are now included under the Employment Act, bringing them minimum protection under the act. After six months of continuous temporary employment, the worker must either move to a fixed- or indefinite-term contract of employment or have their employment terminated

Employer implications

While the changes are intended, in part at least, to modernize the act and clarify certain matters, particularly around termination of employment and severance, they will in sum increase labor costs, albeit from a low base. Employers should review the changes in consultation with their legal counsel and consider any updates to their policies and procedures in order to comply with the new provisions.