Understanding the payslip system in Uganda

A payslip is a document provided by an employer to an employee that shows their earnings, deductions, and other financial details. It is proof of payment from the employer to its employees and is essential to understanding a worker’s pay and ensuring accuracy. 

The Employment Act of 2006 is the main piece of legislation covering employment in Uganda, and it requires employers to provide payslips to their employees. 

The payslip must contain: 

• the full name of the employee, 
• the employee identification number or payroll number, 
• the employee’s designation or title, 
• total absences or leaves (paid or unpaid), 
• contact details, and 
• the employee’s job title or department (sometimes).

The heart of a payslip lies in the section dedicated to earnings, which lists an employee's compensation sources, including basic salary, allowances, and bonuses. The payslip must also show the gross pay (total pay before any tax or contribution to the social insurance or provident fund has been taken off), details about deductions (like taxes, pension, and insurance), and net pay (take-home pay after deductions).

Correct PAYE

The employer is responsible for withholding the correct PAYE (pay-as-you-earn) and making payment to the Uganda Revenue Authority (URA) within 15 days after the end of the month in which the payment was made. Employers are also obliged to contribute every month to the National Social Security Fund (NSSF) 15% of an employee’s wages, and cash allowances; however, 5% may be deducted from the employee’s wage as his share of the contribution. This has the effect of reducing the employer liability to 10% and is therefore the practice followed by the majority of employers. Non-resident employees working in Uganda for more than three years are required to make contributions toward NSSF as well. If expatriate employees are still making payments toward a social security scheme in their home countries, they can apply to the fund for exemption from making contributions.

Payslip is compulsory

In conclusion, a payslip is a compulsory document that employers in Uganda must provide to their employees. It must contain specific information, including the employee's full name, identification number, designation or title, total absences or leaves, contact details, and job title or department. The payslip must also show the gross pay, details about deductions, and net pay. Employers are responsible for withholding the correct PAYE and making payment to the URA within 15 days after the end of the month in which the payment was made. Employers are also obliged to contribute every month to the NSSF 15% of an employee’s wages, and cash allowances.