Workers Compensation Act

Workers Compensation Act

Workers Compensation Act

Workers’ compensation is a system that provides cash and non-cash payments to individuals who have suffered loss, suffering, or injury while on the job.

Impairment and Disability:

Impairment refers to the loss of function of an organ or part of the body compared to its previous state.

Disability, on the other hand, considers the impact of impairment on societal or work functions. It takes into account the loss of function and the patient’s work requirements and home situation. Disability evaluations assess both impairment and its effect on occupational or societal functioning.

Certain agencies use a more restrictive definition of disability such as “inability to perform any substantial gainful work

Others define it as an “inability to perform the essential tasks of the usual employment.” However the determination of disability is always predicted on an assessment of impairment followed by a determination of the loss of occupational or societal functioning that result from the impairment

Compensation may be used to;

  • Recruit and retain qualified employees.
  • Increase or maintain morale/satisfaction.
  • Reward and encourage peak performance.
  • Achieve internal and external equity.
  • Reduce turnover and encourage company loyalty.
  • Modify practices of unions through negotiations.

Types of Compensation:

  1. Base Pay: Base pay refers to the fixed amount of money an employee receives for their work before any additional payments or deductions. It is the regular salary or wage agreed upon between the employer and the employee.

  2. Commissions: Commissions are additional payments that employees receive based on a percentage of sales or revenue they generate. This type of compensation is common in sales or business development roles, where employees earn a commission based on the value of the products or services they sell.

  3. Overtime Pay: Overtime pay is the additional compensation provided to employees for working beyond their regular working hours. Typically, employees receive a higher rate of pay, often called “time-and-a-half” or “double-time,” for the extra hours worked beyond the standard workweek.

  4. Bonuses, Profit Sharing, Merit Pay: Bonuses are one-time payments given to employees as a reward for achieving specific goals or exemplary performance. Profit sharing involves distributing a portion of the company’s profits among employees. Merit pay, also known as performance-based pay, is given to employees based on their individual performance or merit.

  5. Stock Options: Stock options are a form of compensation that grants employees the right to purchase company stock at a predetermined price within a specified time period. This provides employees with the opportunity to share in the company’s success and potentially benefit from an increase in stock value.

  6. Travel/Meal/Housing Allowance: Travel, meal, and housing allowances are additional payments or reimbursements provided to employees to cover the expenses incurred during work-related travel, meals, or housing accommodations when working away from their usual place of employment.

  7. Benefits: Benefits refer to non-cash compensation provided to employees as part of their overall compensation package. They can include dental, insurance (such as health insurance or life insurance), medical coverage, vacation and leave entitlements, retirement plans, and tax-related benefits.

Worker’s Compensation 

Workers’ compensation act is an ACT to provide for compensation to workers for injuries suffered and scheduled diseases incurred in the course of their employment.

The Worker’s Compensation Act is a legal written document, which establishes the liability of employers for injuries to workers while on the job or illnesses due to the employment, and requiring insurance to protect the workers.

Workers’ compensation is not based on negligence of the employer, but is absolute liability for medical coverage, a percentage of lost wages or salary, costs of rehabilitation and retraining, and payment for any permanent injury (usually based on an evaluation of limitation).   

Compensation can be made for weekly payments in place of wages (functioning in this case as a form of disability insurance), compensation for economic loss (past and future), reimbursement or payment of medical and like expenses (functioning in this case as a form of health insurance). and benefits payable to the dependents of workers killed during employment.

N.B: General damage for pain and suffering, and punitive damages for employer negligence are generally not available in workers’ compensation plans, and negligence is generally not an issue in this case.

The constitution of Uganda (15 February 2006) highlights the following articles as far as  work is concerned.

  • I. Article 25(1): No person shall be held in slavery or servitude

  • II. Article 25(2): No person shall be required to perform forced labour

  • III. Article 29(1): Every person has a right to, Freedom of association which shall include the freedom to form or join associations or unions including trade unions and political and other civic organizations

  • IV. Article 34 (4): Children are entitled to be protected from social or economic exploitation and shall not be employed in or required to perform work that is likely to be hazardous or to interfere with their education or to be harmful to their health or physical, metal, spiritual, moral or social development

  • V. Article 39: Every person has a right to a clean and healthy environment

  • VI. Article 40(1): Parliament shall enact laws-
    a) To provide for the right of persons to work under satisfactory, safe and healthy conditions
    b) To ensure equal pay for equal work without discrimination and;
    c) To ensure that every worker is accorded rest and reasonable working hours and periods of holidays with pay, as well as remuneration for public holidays

  • VII. Article 40(2): Every person in Uganda has a right to practice his or her profession and to carry on any lawful occupation, trade or business

  • VIII. Article 40(3): Every worker has a right to-
    a) To form or join a trade union of his or her choice for promotion and protection of his or her economic and social interests
    b) For collective bargaining and representation, and
    c) To withdraw his or her labour according to the law

  • IX. Article 40(4): The employer of every woman worker shall accord her protection during pregnancy and after birth, in accordance with the law.

Instances for compensation

1. Employer’s liability (an obligation to be fulfilled by an institution)

2. Fatal injuries. A serious workplace injury is an accident at work that:

  • Is or may be fatal
  • Results in a loss of a limb
  • Produces unconsciousness 
  • Results in a substantial loss of blood 
  • Involves a fracture
  •  Involves the amputation of a leg, arm, hand, or foot 
  • Consists of burns to a large portion of the body 
  • Causes the loss of sight in an eye
3. Permanent total or partial or temporary incapacity 
4. Agreement as to compensation 
5. Appeals 
6. Insurance 
7. Bankruptcy of employer 
8. Contracting out

Terms used in compensation 

  1. Permanent total incapacity – the worker is permanently incapacitated for any employment which  he/she was capable of undertaking at the time when an accident occurred. 
  2. Permanent partial incapacity – capacity to perform has been reduced by a percentage. 
  3.  Temporary incapacity – worker is able to regain capacity to perform after sometime. 

Computation for Compensation 

  1. Permanent total incapacity; Total monthly earnings x 60 months x percentage of incapacitation  awarded by medical officer/practitioner. In case the injured worker requires assistance (wheel chair,  feeding, dressing, etc. The pay is increased by 25% of amount computed 
  2. Permanent partial incapacitation: Total monthly earnings x 60 months x percentage of incapacitation  awarded by medical practitioner. 
  3.  Temporary incapacity: Daily earnings x number of days of incapacitate x percentage of incapacity
  4. NB: In case of death, settlement for claims is made through the Administrator general.

Example for Permanent Incapacitation.

Let’s assume that an injured worker’s total monthly earnings are Shs. 3,000,000/= and they have been determined to have a permanent total incapacity with an incapacitation percentage of 70%.

To compute the compensation for permanent total incapacity, we use the formula: Total monthly earnings x 60 months x percentage of incapacitation.

Using the given values, the computation would be as follows:
3,000,000/= (total monthly earnings) x 60 (months) x 0.70 (70% incapacitation) = Shs. 126,000,000/=

However, in this case, the injured worker requires assistance for daily activities, such as using a wheelchair, feeding, and dressing. Therefore, the pay is increased by 25% of the computed amount.

25% of Shs.126,000,000/= Shs. 31,500,000/=

So, the total compensation for permanent total incapacity, considering the additional assistance required, would be Shs.126,000,000 + Shs. 31,500,000 = Shs.157,500,000/=

This calculation ensures that the injured worker receives appropriate compensation based on their incapacitation and the impact it has on their ability to work.

Factors that determine compensation claims of employees

1. Years of experience and education level.
It probably goes without saying, but the more experience and education candidates have, the more money they can command.
2. Industry/nature of job.
Depending on the industry, you may have to pay vastly different wages for the same skill sets.
3. Location.
Location can drive compensation rates up or down, depending on the cost of living.
4. Skill sets.
When it comes to determining compensation, it might seem like second nature to search by job title; however, searching by job title can be unreliable. After all, a product manager at one company could have a vastly different role – and require a different set of skills – from a product
manager at another company.
5. Supply and demand.
It’s crucial to be aware of the availability of talent for the position for which you’re recruiting. If you’re recruiting in an area where the supply of talent outweighs the demand, you should expect to pay more in order to lure talent.

Eligibility criteria for compensation

Typically, there are four basic eligibility requirements for workers’ comp benefits:

  1.  You must be an employee. In particular, independent contractors (like freelancers, consultants, or volunteers) typically aren’t entitled to workers’ compensation benefits
  2.  Your employer must carry workers’ compensation insurance.
  3.  You must have a work-related injury or illness.
  4.  You must meet your state’s deadlines for reporting the injury and filing a workers’ compensation claim.


The Act addresses matters such as: 

  • Assisting injured or disabled workers and their dependants,
  •  Assessing employers
  • The rights and responsibilities of employers and workers with respect to occupational health and safety
  • Setting and enforcing occupational health and safety regulations and standards
  • Inspecting workplaces, issuing orders, and imposing penalties.

Steps to claiming compensation

  1.  Support a workplace where there is trust and mutual respect. A negative work environment almost invites workers’ compensation losses and can inevitably make them worse. Injured workers can often lack motivation to get better because they don’t want to go back to a workplace environment they feel is unfriendly, unwelcoming or distrustful.
  2.  Inform employees of the injury reporting process. The process should be part of the employee rules of conduct and provide clear step-by-step rules for employees to follow in the event of an injury. Employees should know to inform their supervisor of an injury as soon as possible, get emergency help if needed or at least see a doctor if necessary. Employees also need to know where to find easily accessible information about how to fill out a claim form, benefits available and the importance of rehabilitation and returning to work.
  3.  Establish procedures to ensure that injured employees get prompt medical attention in the most appropriate ways. This should include establishing:
    ✔ relationships with occupational medicine practitioners who understand your business
    ✓ referral program to appropriate medical specialists
  4. Maintain a policy of reporting claims to your workers’ compensation carrier the same day they occur. If a claims adjuster is able to quickly respond, this will minimize the sense of uncertainty that often results when someone is injured and confused about whether their claim will be handled promptly and equitably.
  5.  Investigate the accident thoroughly. This is essential not only to quickly resolve the immediate claim and mitigate the loss but to prevent future losses. Your accident investigation should include;
    ✓ Written statements from the employee-claimant and any co-workers or witnesses at the accident site.
    ✓ Written statement from the supervisor.
    ✓ Supporting documentation such as photographs of the accident site.
  6.  Maintain clear communications with the injured employee throughout the claims process. Help them understand the process, what to expect in terms of medical treatment, payments for their medical treatment and status of their pay. Remind them that you support them and want to see them back on the job as soon as possible.
  7.  Have an early return-to-work program. They help employees recover faster by allowing them to quickly return to feeling like useful contributors. And they reduce the costs of temporary total disability. Arrange for employee to return to work in light duty/modified duty
  8.  Consider the value of;
    ✓ Future medical treatment
    ✓ Rehabilitation
    ✓ Vocational training
    ✓ Value of death and funeral benefits
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1 thought on “Workers Compensation Act”

  1. These are good articles, however, the problem is accessibility for reading or revisions, please make them more accessible like for download, or an e library, among others.

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