Why most Ugandan workers are not covered under workman's compensation insurance policy

Workers’ compensation is a legal obligation for all businesses operating in Uganda, regardless of size.

Section 18 of the Workers’ Compensation Act mandates that employers compensate workers who sustain injuries, contract diseases, or lose their lives in the course of their duties.

The best way to do this is through insurance, but most employers ignore it. 

Insurance Appeals Tribunal chairperson Rita Namakiika Nangono says the risk of bankruptcy is high if a company is forced to directly pay workman's compensation.

Globally, approximately 860,000 workers sustain workplace injuries daily, with 1,000 fatalities reported due to unsafe conditions.

Locally, in Kampala city’s construction sector, 32.4% of workers experience injuries, 70% of which occur during night shifts.

Real-life story

The personal story of 50-year-old Reginah Nandawula accentuates the devastating impact of non-compliance in workplace injury cases.

In 2018, Nandawula, a former records keeper at one of the banks in Uganda, suffered a workplace injury when a roller shutter struck her foot.

Although the injury required expensive surgery, the bank compensated her with only shillings 2.9 million, which she claims was irregularly calculated.

Nandawula says she has spent over shillings 75 million on medical treatment, depleting her shillings 58 million savings from the National Social Security Fund (NSSF) in the process.

"For six years, I have sought justice tirelessly. My savings are gone, and I’m left with health complications that could lead to a stroke," she lamented.

Her plight highlights the urgent need for robust enforcement mechanisms and enhanced protection for workers.

"Following Nandawula’s injury, the bank ensured her immediate treatment and fully covered her medical expenses for two months. In August 2020, she submitted an incapacity assessment, based on which the bank processed and paid her compensation of shillings 2, 918,321 in accordance with the law," Helena Mayanja, the bank’s spokesperson, explained.

However, Nandawula’s employment was terminated on December 13, 2018, while she was still on medication, following a disciplinary process, and all employment-related benefits, including medical coverage, were ceased as per bank policy.

Later, Nandawula initiated legal proceedings against the bank, claiming her injury had not fully healed. However, Mayanja says the bank engaged with her legal representatives in good faith, offering medical reassessments and negotiations. Despite these efforts, a resolution has yet to be reached.

For now, Mayanja says the bank will await the final ruling while remaining committed to compliance with the outcome.

In 2011, Benedicto Katongole, who had worked for G4S Secure Solutions (U) Ltd for 13 years, sustained a back injury, which was worsened by another workplace injury while lifting a load in 2021.

Despite initial treatment, Katongole says the company restricted medical expenses to shillings 500,000 and ignored the doctors’ recommendations to assign him light duties.

He further claims he was tricked into signing an agreement, indicating that he had been compensated for the 2011 injury. In July 2023, he was dismissed.

He claims he has spent over shillings 18 million on treatment which has impoverished him. His case, still pending in court, has left him destitute.

He says his wife has since left him to solely fend for his seven children due to financial difficulties.

When contacted, a human resources officer at G4S acknowledged awareness of Katongole’s case but stated it was in court and could not comment further.

Lenient penalties for violators

Ibrahim Kaddunabi Lubega, the chief executive officer of the Insurance Regulatory Authority (IRA), attributes this to lenient penalties for violators. Many businesses operate without the necessary insurance coverage, leaving workers vulnerable.

Kaddunabi stressed the importance of strengthening workers' rights through recognised Workers’ Unions, which advocate for fair treatment and address employee concerns effectively.

Uganda Registration Services Bureau data indicates there are approximately 500,000 registered businesses in the country, but most of them do not insure their workers.

The IRA Market report of 2022 indicated that the number of workers' compensation insurance policies issued stood at 2,347, covering only 30,555 out of approximately 9.7 million employed Ugandans, according to data from the 2024 Uganda Bureau of Statistics (UBOS). 

What the law says

According to the Workers’ Compensation Act, employees receive compensation of up to 60 months’ earnings, depending on the severity of the injury or disease.

Compensation excludes medical costs and is calculated based on the worker's salary. For instance, a worker earning sh1.5m per month could receive sh90m in compensation for a permanent injury.

Ernest Magezi Barusya, the CEO of Kenbright Uganda, says workers’ compensation insurance can cost as little as 0.25% of an employee’s annual gross pay.

Statistics from the gender ministry reveal that while 160 workers’ compensation cases are reported annually at its Kampala headquarters, thousands go unreported.

Of the cases that are reported, fewer than half are resolved, with many escalating to the Industrial Court. At the moment, more than 2,500 cases are pending at the Industrial Court.

Systemic failures

The assistant commissioner for labour in the gender ministry, Onzoma Apollo, points out limited funding which undermines the government’s ability to enforce workers’ compensation laws effectively.

“It is difficult to determine how many employers provide workers’ compensation insurance. We need a clear reporting system and empowered labour officers to enforce compliance. Employers often delay payments or refuse to comply, forcing disputes into lengthy court battles,” he explains,”.

He also highlights the lack of robust mechanisms to track compliance with the Workers’ Compensation Act.

Need for awareness

According to Onzoma, both employers and employees lack awareness of their responsibilities, which perpetuates a cycle of non-compliance. He said most cases come to light only when workers report them.

“Many workers suffer in silence. Some don’t even realise they’ve been unfairly compensated because they’re unaware of their rights,” Onzoma said.

However, victims like Nandawula and Katongole attribute their plight to a lack of support from labour officers, the Ministry of Gender, the Medical Arbitration Council, workers’ unions, and courts.

For Nandawula, she says it took her almost 2 years to get a proper response from the gender ministry, and that the response was not even in her favour. 

It should be noted, however, that not all organisations fall short. Vision Group, for instance, has gone beyond legal requirements by offering Group Personal Accident Insurance (GPA), which covers injuries both at work and outside.

“Over the past five years, fewer than 35% of our compensation cases have been work-related,” David Ossiya, Vision Group’s human resources administrator, says.

Silagi Magara, an economist with Oxfam Uganda, criticized businesses for failing to comply with workers’ compensation laws, saying, “Non-compliance not only jeopardizes workers’ lives but also poses significant financial risks to businesses when they have to pay compensation out-of-pocket.”

“I am a living example and beneficiary of workman’s compensation insurance policy. I was playing football and the tendon of my foot got fractured. I underwent surgery and was treated at a cost of about sh14m and I was even compensated for the 5 months I spent away from work nursing my injury,” he said. 

Survey 

According to the most recent survey conducted by the Uganda Insurers Association (UIA), an overwhelming 56% of respondents identified the lengthy claims process as the biggest obstacle, leading to prolonged delays in receiving compensation.

UIA chief executive officer Jonan Kisakye says this delay often intensifies the financial strain on injured workers, leaving them exposed while they await due benefits.

In addition, the survey indicated that 19% of workers reported issues with under-declaration of medical costs by doctors, which can result in inadequate compensation for treatment expenses.

Furthermore, a significant portion of workers (14%) mentioned the extensive documentation required to complete a claim, making it difficult for injured employees, especially those in critical conditions, to meet these demands.

Mechanisms to address workers issues

Lubega said mechanisms are in place to address the struggles workers face in accessing compensation claims.

He said that the Authority also established a complaint-handling mechanism to monitor compliance or misconduct of insurers, and protect consumers – the Complaints Bureau

Additionally, he said that they have established and recognized Workers’ Unions empowered to advocate for worker’s rights. 

“There are advocacy programs for employers and employees, which have been strengthened to help in negotiating for fair compensation especially where there are disputes,” he said.

The law empowers labour officers at district level to enforce compliance. If these officers are supported, Lubega said that employees and employers will have a clear reporting structure in case of a work-related injury or accident.

Conclusively, he noted that regular inspections of insurance companies ensure compliance with established standards, processes, and timelines, while also monitoring adherence to regulatory requirements, including the timely settlement of claims. 

Premiums and claims paid

According to Kaddunabi, workers’ compensation insurance premiums have fluctuated over recent years. Premiums dropped from shillings 16 billion in 2019 to shillings 13 billion in 2021, largely due to the economic impact of the COVID-19 pandemic.

However, the trend reversed in 2022, with premiums increasing to shillings 14.1 billion and further to shillings 14.3 billion in 2023.

In 2023, insurance claims paid out totalled shillings 820.47 billion, representing 51.17% of gross written premiums, an increase from sh618.71b in 2022.

Notably, the loss ratio for workers’ compensation insurance has stabilized. In 2023, it stood at 34.7%, a significant improvement from 52% in 2022 and 69% in 2021. Pre-pandemic, the ratio was 29% in 2019, reflecting a more stable industry adapting to challenges.

Insurance penetration remains low

Generally, Uganda's insurance penetration remains the lowest within the East African Community, recorded at approximately 0.77% in 2020, 0.84% in 2021, and showing a modest increase to 0.876% in 2022, according to data IRA.

 On a broader scale, only 2% of people in sub-Saharan Africa are insured. In contrast, insurance penetration in countries such as South Africa, Namibia, Lesotho, and Kenya stood at 16%, 6.6%, 4.7%, and 3.4%, respectively, as of 2022.