Analysis of the Employment (Amendment) Act, 2025: A Fundamental Shift in Uganda’s Employment and Labour Relations Framework

Introduction

The Employment (Amendment) Act, 2025 marks one of the most significant reforms to Uganda’s labour and employment framework since the enactment of the Employment Act Cap 226 nearly two decades ago. The amendments introduce substantial legal, operational and financial implications for employers, employees, recruitment agencies and labour market regulators. More importantly, they signal a decisive shift from a relatively flexible and employer-driven framework towards a more structured, rights-based and compliance-oriented employment regime.

Since 2006, employment relationships have evolved significantly — characterised by increased casualisation of labour, expansion of labour externalisation arrangements, rising cross-border recruitment of Ugandan workers, growth in outsourced and mobile work environments, and increased litigation before the Industrial Court. In many respects, the courts have over time filled gaps left by the principal legislation, and those principles now appear to be codified within the amendments.

Expansion of Employee Protection for Domestic Workers & Casual Employees

Under the previous Employment Act, Cap 226, domestic workers were not expressly and comprehensively regulated despite technically falling within the broad definition of employees. The amendments substantially alter that position — domestic workers such as house helps, caretakers, drivers, gardeners and nannies are now expressly recognised, with statutory rights extending to written contracts, fair disciplinary processes, severance allowance, maternity protection, sick leave, wage compliance and workplace harassment protections.

The insertion of section 34A introduces a six-month limitation on continuous casual employment and provides that where a casual employee is laid off and subsequently rehired, the service shall be regarded as continuous. This directly targets the practice of repeatedly terminating and re-engaging workers to avoid permanent employment rights. Sectors heavily dependent on casual labour — construction, manufacturing, hospitality, security services, agriculture and outsourced labour providers — may face significantly increased exposure to claims relating to continuity of service, unfair dismissal and severance entitlement.

The introduction of section 34B formally recognises piecework contracts within Uganda’s employment law framework, confirming that workers paid based on output may still qualify for statutory labour protections.

Broadening the Definition of the Workplace

The amendment significantly expands what legally constitutes a workplace. The new definition extends beyond traditional office spaces and factories to include households, temporary worksites, mobile work environments, open-air locations, vehicles, oil fields, aircraft, ships and virtually any location where a worker is present as a consequence of employment.

The broadened definition strengthens regulation of Uganda’s growing gig economy by extending potential labour protections and employer obligations to mobile, remote and platform-based workers, and increases the likelihood that courts may treat some gig work arrangements as employment relationships rather than purely independent contracts.

Workplace Dignity, Harassment and Psychological Safety

The new section 6A removes the previous 25-employee threshold for harassment obligations and introduces a broad prohibition against workplace intimidation and harassment, covering verbal abuse, humiliation, threats and hostile work environments. It expands employer liability to include the actions of supervisors, managers, HR personnel and other employer representatives — and crucially introduces potential criminal liability for workplace intimidation and harassment.

This shifts Uganda’s workplace protection framework from a narrow sexual harassment regime toward a broader dignity-at-work model encompassing psychological safety, emotional wellbeing and respectful workplace treatment.

Regulation of Labour Externalisation and Overseas Recruitment

The new Part IVA establishes a much stricter regulatory framework for recruitment agencies and overseas labour placement. Agencies must now be incorporated, licensed, maintain records, verify qualifications, conduct pre-departure training and include repatriation clauses in employment contracts, with heavy penalties for non-compliance. Section 38E(4) imposes personal criminal liability on directors, managers and controlling officers of recruitment agencies involved in unlawful recruitment practices, limiting the traditional protection of corporate personality.

Expanded Employee Protection During Illness

Sick leave entitlement increases from one month of full pay to two months of full pay followed by four additional months at half pay, with termination permissible only after six months of continuous illness and after obtaining a medical opinion. Crucially, the amendment does not allow termination solely because an employee has been ill for six months; the employer must also prove the employee is unable to perform their duties.

Breastfeeding and Childcare Facilities

The new section 56A requires all employers to provide time, space or facilities for breastfeeding and childcare for children between three and thirty-six months — without any minimum workforce threshold, potentially creating substantial compliance burdens even for SMEs and informal-sector employers.

Fundamental Restructuring of Dismissal and Termination Law

The amendment to section 64 clearly distinguishes termination (operational/incapacity) from dismissal (misconduct). Employers must now carefully categorise the basis upon which employment relationships are ended. The amendment formally recognises redundancy, medical incapacity, and statutory incompatibility (loss of professional licences, immigration non-compliance, statutory disqualification) as lawful grounds for termination.

The new section 64A codifies misconduct-based dismissal grounds, including abscondment (defined as absence for more than thirty consecutive days), use of forged documents or false qualifications, conduct that negatively affects the employer’s business, and contractual grounds.

Enhanced Procedural Fairness

The substituted section 65 requires employers to explain reasons for dismissal, allow representation, hear the employee’s defence and provide at least five working days for preparation. New section 65C prohibits dismissal or disciplinary action based on protected grounds such as pregnancy, lawful leave, trade union activities, discrimination, filing complaints against an employer, or temporary absence due to illness or injury.

Probationary Employment

The amendment introduces automatic confirmation of employment by operation of law where an employer continues paying an employee after expiry of probation without formally extending the probationary contract, and increases notice during probation from seven days to one month.

Conclusion

The Employment (Amendment) Act, 2025 represents a significant and largely welcome step toward modernising Uganda’s employment framework. Employers should now: review and update employment contracts; revise HR and disciplinary policies; train managers on workplace dignity obligations; build absence management and sick leave systems; reassess severance reserves; and audit recruitment, gig-economy and domestic-worker arrangements for compliance exposure.