Background: Extended work hours have become increasingly prevalent in Ugandan organizations, yet their relationships with employee compensation structures and productivity outcomes remain poorly understood, hampering evidence-based policy development. Objective: This study examined the relationships between extended work hours, employee compensation structures, and perceived productivity in Ugandan organizations, analyzing both direct effects and mediating mechanisms through compensation satisfaction, perceived fairness, and job satisfaction. Methods: A cross-sectional survey was conducted with 393 employees from manufacturing, services, education, and healthcare sectors in urban Uganda between June and August 2024. Data were collected using validated questionnaires measuring work hours, compensation structures, satisfaction dimensions, and perceived productivity. Statistical analysis employed univariate descriptive statistics, bivariate correlations and group comparisons, and structural equation modeling to test hypothesized relationships and mediation effects, with model fit evaluated using multiple indices (CFI, TLI, RMSEA, SRMR). Results: The sample demonstrated widespread extended work hours, with only 15.8% working within the statutory 48-hour week and 55.2% exceeding 55 hours weekly (M = 56.19, SD = 7.62). Work hours exhibited significant negative correlations with compensation satisfaction (r = -0.233), perceived fairness (r = -0.186), job satisfaction (r = -0.314), and perceived productivity (r = -0.338, all p < 0.001). Employees receiving overtime compensation reported significantly higher satisfaction, fairness perceptions, and productivity compared to those on fixed salaries (all p < 0.001, Cohen's d > 0.80), despite similar work hours. Structural equation modeling demonstrated excellent fit (CFI = 0.967, TLI = 0.954, RMSEA = 0.024) and revealed that extended work hours negatively affected productivity both directly (β = -0.271, p < 0.001) and indirectly through reduced compensation satisfaction, fairness perceptions, and job satisfaction (total indirect effect = -0.217, 95% CI: -0.284 to -0.156), with the total effect being substantial (β = - 0.488). The model explained 54.7% of variance in perceived productivity, with compensation satisfaction emerging as a critical mediator (β = 0.284 to productivity, p < 0.001). Conclusion: Extended work hours in Ugandan organizations were negatively associated with both employee wellbeing and perceived productivity, with compensation structure significantly moderating these relationships. The findings challenge prevailing assumptions that longer hours enhance productivity and demonstrate that inadequate compensation for overtime work undermines both fairness perceptions and productivity outcomes. Organizations should implement overtime compensation policies, enforce work hour regulations, and develop productivity metrics that reward efficiency over presenteeism to enhance both employee welfare and organizational effectiveness.