I am in the process of formalising contracts with my supermarket staff. However, when we tell them that their salaries are going to be subjected to NSSF, PAYE they are failing to embrace the idea and instead are asking for salary increment to cover the deduction so that their current take home is not affected. How can I explain this to them?
While I give advice in response to your questions, may I suggest you engage a good lawyer whose specialty is employment contract law with an appreciation of Ugandan tax laws? The contract should comprehensively define the employer-employee relationships including the obligations for each party. Any payments given to staff as benefits are subject to tax.
Your contract will have significantly more details giving context to the relationship including aspects such as working hours, end date of the contract, leave management, a description of certain processes such as probation, performance management, grievance and disciplinary procedures, obligations of each party and clauses that protect both parties.
It is not uncommon for staff to push back on having to make NSSF contributions. My advice is to contact NSSF and ask them to present and speak to your staff. You will find they will trust the communication from NSSF and are likely to shift their thinking once they have appreciated the long term add value.
On PAYE this is the law and you cannot deviate from that position. My final comment, is you take an empathetic view of the concerns raised by your employees.
Make sure your employees take home an income that enables them to look after themselves and their families. Whatever adjustments made should not result in staff earning less than what they are currently earning.
The Leadership Team (U)