Do I Need a Local Entity to Hire in Uganda?

In Uganda, a "local entity" refers to a recognized business presence, such as a subsidiary or branch office, that can legally employ individuals and fulfill local employment obligations. This setup allows your company to manage payroll, social security contributions, and comply with Uganda's labor laws.

Without a local entity, you generally can't register as an employer, run local payroll, or issue compliant employment contracts. However, utilizing an Employer of Record (EOR) can streamline the hiring process without the need for a local entity, allowing you to focus on your business growth.

What is Required to Employ Someone in Uganda?

• Local employing entity required to directly employ? Yes (required for direct employment, unless using an EOR)
• Payroll registration required? Yes (must register with the Uganda Revenue Authority)
• Withholding/tax remittance required? Yes (employers must withhold income tax and remit to URA)
• Social contributions required? Yes (mandatory contributions to the National Social Security Fund)
• Local employment agreement required? Yes (written contracts are standard practice)
• Mandatory benefits to budget? Yes (includes annual leave, sick leave, and maternity leave)
• Works council/collective agreements considerations? Usually (depends on the sector and employee count)

Best Options If You're Hiring in Uganda

Can I Hire Contractors Instead of Setting Up an Entity?

Yes, but you should be cautious about the nature of the work relationship.

Hiring contractors in Uganda can be a viable option, but ensure that the arrangement does not resemble employment to avoid misclassification risks. The Ugandan labor laws provide strong protections for employees, and misclassifying a contractor as an independent worker can lead to legal challenges.

• Ensure contractors have independence in their work.
• Avoid controlling their hours or methods of work.
• Keep the contractor's role clearly defined and project-based.

How Long Does Entity Setup Take And What Does It Cost?

Typical entity setup timeline: It often takes 4–8 weeks to set up an entity in Uganda, depending on the required registrations.

Ongoing cost categories (entity route):

• Accounting, bookkeeping, and statutory filings: Estimated 1,000,000–2,500,000 UGX per month ($270–$675)
• Payroll provider: Estimated 150,000–400,000 UGX per employee per month ($40–$108)
• Employer registrations and recurring compliance: Varies by complexity
• Corporate tax filings and annual reporting: Estimated 2,000,000–5,000,000 UGX per year ($540–$1,350)

EOR cost components (no-entity route):

• A per-employee EOR service fee (from $399 p/month with Playroll)
• Pass-through statutory costs (e.g., employer social security contributions)
• Any optional benefits you choose to provide beyond statutory minimums

How an Employer of Record Can Help You Hire in Uganda

Hiring in Uganda can be complex, but it doesn’t have to require setting up a local entity or taking on long-term overhead. With an Employer of Record like Playroll, you get a simple, predictable way to hire compliantly while keeping costs transparent and under control. We help you:

• Hire employees in Uganda quickly without establishing a local entity, eliminating incorporation costs, ongoing administration, and exit complexity.
• Stay fully compliant with local payroll, tax, and employment regulations with Playroll’s payroll services.
• Control your total employment costs, with a clear monthly EOR service fee (from $399 per employee).
• Focus on growing your business, while we manage contracts, payroll, compliance, and labor law obligations end to end.
• Scale up or exit the market easily, without the financial or legal burden of closing a local entity.