There is no statutory formula — the figure is agreed or decided

Most countries set a formula for severance. Uganda does not, and understanding that changes how you approach a termination.

The entitlement exists

Under the Employment Act 2006, as amended in 2023, an employee is entitled to a severance allowance after six months or more of continuous service with the same employer.

But the amount is negotiable

The amount is negotiable between the employer and the worker, or the labour union representing them.

If there is no agreement, the amount is determined by a Labour Officer, based on factors including length of service, wages, and the circumstances of termination.

That means your preparation matters more here than in a jurisdiction with a fixed multiplier. Bring evidence of your service length, your wage history and the circumstances.

When it is due

Severance arises where:

• The employer terminates the contract, other than for serious misconduct
• You are declared redundant or laid off due to restructuring, closure or reduced operations
• The employer becomes insolvent or is placed under receivership or liquidation
• Termination by a Labour Officer following the employer's inability or refusal to pay wages
• The contract is terminated unfairly or without following lawful procedure

When it is not

Severance is not paid in cases of justifiable summary dismissal for serious misconduct.

What it must include

The severance pay must include any gratuity, bonus or pay deducted for severance allowance, paid on cessation of employment.

The double-payment penalty

This is unusually direct. An employer who fails to pay the severance allowance on time and in the prescribed manner commits an offence and will pay a fine of twice the amount of the payable severance allowance.

Non-payment is not just a debt — it doubles.

If the employee dies

Severance must be paid to the surviving spouse, or other adults and dependants, within 30 days.

Timing

Terminal benefits must be settled within a reasonable time. In practice, employers aim for the final payroll cycle or within 7 to 30 days.

Where a Labour Officer determined the amount, payment should follow immediately after the decision or signed settlement.