Uganda’s oil sector is brimming in action. With preparations for the development of Tilenga and Kingfisher oil fields and the construction of the 1,443-kilometre East African crude oil pipeline in full swing, the optimism is understandable.
Ugandan oil is a sunrise sector. Several contractors and suppliers, both foreign and local, will be participating in the development and construction stage. Obviously, the activities will involve thousands of skilled and semi-skilled national and foreign workers.
Compliance is a key consideration for reputable suppliers and contractors.
We summarize 10 compliance facts every supplier to the Ugandan oil sector must know.
1. National Content Regulations
The Uganda National Content Act imposes an obligation to include a percentage of locally produced goods, locally produced services, and the utilization of personnel, financing, goods, and services by a local content entity in any operation or activity carried out in Uganda. The Act places an obligation on a local content entity to give preference to goods manufactured and services produced in Uganda.
2. National Supplier Database
Every supplier to the Ugandan oil sector must be registered in the National Supplier Database. A company not registered under NSD cannot supply goods and services to the oil sector.
3. HR Services to Oil Sector are Ringfenced to Ugandan Firms
HR services to the oil sector are ringfenced to the Ugandan suppliers. Foreign companies cannot directly supply labor to the Ugandan oil sector.
4. Recruitment Agencies in Uganda must be Licensed by MGLSD
Recruitment agencies in Uganda must be licensed by the Uganda Ministry of Gender Labor and Social Development (MGLSD). Avoid dealing with unlicensed recruitment firms.
5. An Unregistered Foreign Entity Cannot Employ Ugandan Labor
An unregistered foreign entity cannot employ Ugandan labor (except with the approval of the MGLSD). So unregistered foreign companies need to use the services of an NSD registered HR firm to engage labor.
6. Foreign nationals must have a Work Permit
Foreign nationals must have a work permit issued by the Citizenship and Immigration Control Board of the Ministry of Internal Affairs to work in Uganda. For the oil and gas sector, the Petroleum Authority of Uganda (PAU) approval is necessary.
7. Law Regulates Working Hours in Uganda:
The Employment Act 2006 provides that the standard workweek in Uganda is 48 hours over six days. Employees are not allowed to work more than 10 hours in a single working day or 56 hours per week. However, exceptions apply where the employer and the employee may agree that the maximum working hours per week may exceed 48 hours for example for shift work.
8. Use of Casual Labor
A company cannot employ casual labor for more than four months.
9. Tax and Statutory Deductions
An employer must deduct an income tax i.e., Pay as You Earn (PAYE) from the gross employment income of an employee, subscribe to National Social Security Fund (NSSF), and pay Local Service Tax (LST).
All employers must insure workers under workers’ compensation insurance against personal injury. Other insurance policies may apply.
10. Occupational Safety & Health
All employers and contractors must comply with Occupational Safety and Health Act (OSHA). An employer who has at least 20 workers shall have a written statement of policy with respect to the safety and health of employees while at work.
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