Redundancy is one of the few circumstances in which the law permits an employer to terminate employment where there is no misconduct or poor performance on the employee’s part. It is a legitimate, business-driven form of separation arising from operational needs, such as restructuring, reduced workforce requirements, changing skill demands, or technological advancements that render certain roles unnecessary.

This is increasingly common among donor-funded organisations facing funding constraints, as well as businesses adopting automation, artificial intelligence, and AI-driven systems that can perform functions previously undertaken by employees. However, because the employee is blameless, redundancy remains one of the most litigation-prone forms of termination. A genuine commercial decision that is poorly implemented can readily be challenged before a Labour Officer or the Industrial Court as an unfair dismissal.

The Employment (Amendment) Act, 2025, recently gazetted on 5th June 2026 and amending the Employment Act, Cap. 226, now places redundancy on an express statutory footing, clarifies the notification requirements, and introduces a statutory formula for severance pay.

What redundancy is and what it is not?

The Employment Act does not expressly define the term “redundancy”. Uganda courts have described it as “a situation in which an employee is laid off from work because the employer no longer needs the employee”. This focuses on the role rather than the conduct of the employee and recognises that the decision arises from the employer’s operational circumstances rather than any fault on the part of the affected employee.

Redundancy, therefore, arises where a role, rather than the person performing it, becomes surplus to the employer’s requirements. Such termination could result in the termination of less than 10 employees or even 1 employee. It is distinct from two neighbouring concepts that attract different legal consequences, namely dismissal and termination on notice.

(i) Dismissal, which refers to termination initiated by the employer on grounds such as misconduct, abscondment from duty (absence without permission for more than 30 consecutive days), presentation of forged documents or lack of requisite qualifications at recruitment, conduct likely to adversely affect the employer’s business, or any other contractual ground. In contrast, redundancy is not fault-based but arises from operational requirements (Sections 2 and 64A);

(ii) Termination on notice, refers to the no-fault ending of an employment contract by either party upon giving the required notice or payment in lieu. Section 64(1)(a) of the Employment Act preserves this position by permitting termination on notice without the need to assign or prove fault, provided the applicable statutory or contractual notice requirements are met.

The legal framework after the 2025 Amendment

The Act under section 64 expressly recognises termination on grounds of redundancy and imposes a substantive evidential burden on the employer. The employer must demonstrate that the business has ceased business operations, that the role is no longer required due to reorganisation, introduction of labour-saving devices, changes in work patterns, or a reduced need for employees to perform existing work.

Where an employer contemplates termination on economic, technological, structural, or similar grounds, section 80 requires prior consultation with the affected employee(s), including disclosure of the reasons for redundancy, selection criteria, and proposed compensation, with proper documentation. This is followed by notification to the Commissioner for Labour (and relevant trade union, if any) at least thirty days before termination, setting out the reasons, number and categories of employees affected, and the implementation period.

Thereafter, the employer issues the statutory notice of termination to the affected employee(s) in accordance with the applicable notice requirements. Each redundancy selection must be individually justified and recorded with specific reasons beyond general restructuring and communicated to the affected employee. A detailed business justification, consultation records, notices, and related correspondence must be maintained throughout the process.

In addition, sections 86 and 88 introduce a statutory entitlement to severance pay where an employee’s position is declared redundant, calculated at one month’s salary for each year of service. These requirements reflect Uganda’s alignment with the principles of ILO Termination of Employment Convention, 1982 (No. 158), which requires that redundancy be based on valid operational reasons and implemented through a fair and transparent procedure.

The redundancy route is legally available and best reflects the substantive nature of the separation, but it must be implemented as a structured, evidence-based process rather than a simple termination exercise.

Ultimately, compliance will turn to documentation, transparency of selection criteria, and strict adherence to section 80, without which the exercise is vulnerable to challenge before the labour authorities or the Industrial Court.

Authored by:
Abdallah Sekibembe  (Associate)