Employers must know the legal implications of salary deductions

The Covid-19 pandemic is having effects on the health and general welfare of people in Uganda. The effects of the pandemic are both positive and negative. In other words, there are some sectors that are gaining from the situation much as others are losing.
The ability to exploit opportunities within the bad situation counts a lot. The magnitude of the negative effects of Covid-19 varies across and within sectors.
Cash-flow deficiencies occasioned by the lockdown has made it difficult for most employers to meet employee costs, including payment of wages. As a result, some employers have made decisions or are contemplating instituting employee-cost-reduction measures such as pay-cut, employee lay-off or termination.

Many organisations and companies are undertaking this cost reduction measures contrary to the National Guidance given by the President, who advised employers not to terminate services of their workers. His view is that Covid-19 is a temporary occurrence and the situation calls for patience and mutual understanding between workers and employers. He encouraged employers to dialogue with workers and ensure there is no breach of trust because the employers will require these employees when normal operations resume.

In accordance with the President’s guidance, the Minister of Gender, Labour and Social Development, issued detailed guidelines on the management of employment relations during Covid-19. Unfortunately, many employers, particularly those from transport, tourism, and education institutions, among others, have rushed to terminate services of workers without adhering to the guidelines issued by the Ministry. In their attempt to undertake cost-cutting measure, they are contravening the provisions of the Employment Act, 2006, which may in the near future lead to high litigation costs. For starters, termination is expensive. This will occasion more costs to employers in form of payment of terminal benefits, for instance, payment in lieu of notice, compensation for leave days not taken, and severance packages, among others. But let me focus on three important aspects:

Salary reduction: Pursuant to Section 59(1) and (4) of the Employment Act 2006, any changes affecting the wages, which the employees are entitled to receive, including the means of calculation, intervals of payment, deductions and conditions of payment, need to be agreed with the employee before an employer issues a written notice about the change. Therefore, if you have reduced salaries of the workers without their verifiable consent/agreement, then you have contravened the law.
Unpaid leave: The Employment Act, 2006 does not provide for unpaid leave. S.23 of the Employment Act, 2006 provides that a person shall not be employed under a contract of service except in accordance with this Act. It follows, therefore, that an employer may agree with his/her workers on such terms and conditions that do not conflict with Employment Act, 2006.
Collective termination: Employers who despite the associated costs and lengthy procedures opt for termination, should strictly adhere to the law (Sections 58, 65 and 81 of the Employment Act, 2006, as well as Regulation 44(a) and (b) of the Employment Regulations, 2011).

The details of the affected workers such as name, age, sex, occupation, exact date of termination and terminal benefits payment plan should be submitted to Commissioner Labour, Industrial Relations and Productivity.
In line with Section 19 of the Employment Act, 2006, all Employers were requested to provide returns and statistics on the number of workers whose employment relationships have been affected or are likely to be affected during the pandemic. This information will particularly be useful for policy advice and planning.
I therefore, request all employers to respect the National Guidance that was given by the President of not terminating workers services and instead use cheap options to maintain industrial harmony.

Mr Asiimwe is commissioner labour, industrial relations & productivity, Ministry of Gender, Labour and Social Development. [email protected]