National Minimum Wages Act 2018
"Minimum Wages "
Act came into force on the 1st day of January 2019.
Purpose of the Act
purpose of the Act is to address the uniqueness of individual sectors of the
economy while providing for an employer-employee led minimum wages
determination by way of providing a mechanism that allows employers and
employees to be represented and heard during the processes leading to the
establishment of minimum wages including providing for heavy penalties for
previous Act of 1957 was archaic and lacking in the above material aspects.
Establishment of a Minimum Wages Board
Act provides for the setting up of sector specific Boards for this purpose with representation
from Minister of Gender, Labour and Social Development, Ministry of Finance,
Planning and Economic Development, Central Organisation of free trade unions,
National Organisation of Trade Unions and the Federation of Uganda’s Employers
Minister maintains the preserve to appoint the Chairperson of the above Board
and four additional persons to act as assessors who shall be representatives
from bank of Uganda, National Planning Authority, Uganda National Bureau of
Statistics and any other person with knowledge in the sector in respect of the
Assessors have no voting rights but merely make recommendations to the Board
which are not binding.
functions of the Board are not limited to recommending wages for the different
classes of workers in a particular sector but also to recommend on the general
terms of employment in that particular sector including working hours, work
conditions, minimum pay holidays.
Board is adhoc to the extent that upon concluding its final report satisfactory
to the Minister and upon the report receiving Cabinet approval, the Board may
then be dissolved.
Contractual and Court determined minimum wage
way of the Act, employees engaged in a sector with no provision for a minimum
wage may engage in collective bargaining or authorise a third party to
undertake negotiations on their behalf with respect to establishing a minimum wage.
negotiation are guided by the day to day work of employees, total income earned
by the employer, total liabilities and future forecasts of the profitability of
the employers business and any other information which may be of value in this
negotiations once commenced must be concluded within three months subject to
mutual agreement for an extension not exceeding six months.
wage once agreed upon must be paid within 30 days of the ministerial approval
and may be valid for a period not exceeding 5 years at the lapse of which fresh
negotiations may be re-opened. Employers shall also be at liberty to pay
employees a rate higher than the minimum wage
failure to conclude negotiations upon the lapse of six months any interested
party may refer the matter to the Industrial Court for determination of the
minimum wage applicable.
the Court delivering an award, a certified copy shall be shared with the
Minister who shall arrange for it to be gazetted as a wage regulation
applicable to the employees.
employer who pays less wages than those prescribed under the regulation or
fails to observe any of the conditions of employment prescribed in the order
commits an offence is liable upon conviction to a fine not exceeding Ug Shs
1,000,000/= or imprisonment for a term not exceeding three years or both
including an order to pay the difference between the amount which ought to have
been paid and what was actually paid.
Powers of Authorised officers
Act provides for powers of officers to confirm compliance with the minimum wage
in place including any conditions of employment prescribed.
Merits of the Act
to curb exploitation of workers / employees through setting up a minimum wage.
This should assist in improving the quality of life for many Ugandans especially
those providing unskilled labour and also have a knock on effect on
productivity of employees generally;
providing for avenues for wage determination, the Act seeks to ultimately
reduce / eliminate the strikes for low wages among different categories of
for participation of key stakeholders through the composition of the Board,
Assessors and contractual negotiations;
mindful of the different categories of workers for the different sectors and
therefore makes provision for sector specific deliberations in arriving at a minimum
Challenges of the Act
contractual negotiations leading to the establishment of a minimum wage require
the disclosure of sensitive employer information which any Company may not be comfortable/
willing to share with the employees. It also seems to suggest that the employer
and employee should be equal partners in splitting of proceeds from the
business where as not;
Act empowers the Board to determine other conditions of work including the
minimum number of paid holidays. This could potentially create a conflict
between the Employment Act and the Minimum Wages Act where provisions contrary
to those provided in the Employment Act are made.
applicability of this Act is constrained to the extent that a large population
is currently engaged in the informal sector. To that extent the developmental
objective may not be met as planned.
cost of labour if made expensive could ultimately lead to various consequences
including a mass lay off, substitution of human resource for alternative means
such as machinery or exportation of labour to other countries where the same
service can be offered cheaper. This would result into a higher unemployment
composition of the Board appears to create confusion to the extent that it
provides for a composition of four from five separate organisations. It also
appears that keen interest was not paid to ensuring that there is a balance
between employer and employee interests when determining the composition of the
Board. The Board appears to have more pro-employee representation