Nigeria PEO & Employer of Record

WeHireGlobally provides international PEO filings and global recruiting service in Nigeria to companies considering entering the Nigerian market or hiring local/foreign employees in Nigeria. The conventional approach requires setting up a subsidiary in Nigeria. However, our solution allows you to start operating in Nigeria within days, saving you time and money. WeHireGlobally will hire candidates on your behalf while retaining full operational control over their work. So legally they would be our employees, on our local payroll, 100% compliant but working on your behalf.

Nigeria fast facts

Population: 215 million
Land area: 923,769 km²
Capital: Abuja
Local currency: Naira (₦) (NGN)

GDP per capita: $2,432
GDP in currency: $514 billion

Nigeria is geographically diverse with climates ranging from arid to humid equatorial. However, Nigeria’s most diverse feature is its people. Hundreds of languages are spoken in the country, including Yoruba, Igbo, Fulani, Hausa, Edo, Ibibio, Tiv, and English. The country has rich natural resources, including large oil and natural gas fields. Lagos, the former capital, retains its status as the country’s leading commercial and industrial city. Modern Nigeria dates back to 1914 when British protectorates in northern and southern Nigeria were unified. The country gained independence on 1 October 1960, and in 1963 adopted a republican constitution but chose to remain a member of the Commonwealth.

Hiring, Negotiating and Doing Business in Nigeria

Necessity of written employment contract

An employment contract is defined in section 91 of the 2004 Labor Act as “an agreement, oral or written, express or implied, by which a person agrees to hire another person as a worker and that person agrees to serve the employer as a worker”. In Nigeria, as required by the law governing the employee/employer relationship, an employment contract must be signed and accepted by the parties, once signed it becomes binding to the parties. In the event of non-performance or breach, the injured party can assert its rights before the National Industrial Court in the jurisdiction of the injured party.

Different forms of engagement: employment, contracting, work with private entrepreneur

There is no clear statutory distinction between different types of workers in Nigeria. The Employees Compensation Act and the Labor Act use the words “employee” and “workers” respectively to refer to any person employed. However, apprentices, domestic workers, and young people are classified as special workers under labor law. Youth and female employees are not allowed to work at night, subject to some exceptions set out in labor law. Under the Companies and Allied Matters Act, employees who own shares are referred to as employee-shareholders. An independent contractor is a person who is involved by an employer to perform a specific kind of job. An independent contractor is not under the control of the employer and performs its professional work. On the other hand, an employee is committed to providing services under the control of employers. An employee who is misclassified as an independent contractor loses all the rights and privileges of an employee. However, a person who actually performs their work as an employee will be considered an employee under the law and not an independent contractor.

Nigeria Employment Contract

Types of employment agreements

Generally, employments in Nigeria fall within three categories and are: 

• Employment which is governed by statute

 This is employment with statutory flavor. Employment is said to have a statutory flavor when the appointment and termination are protected by statute or laid down regulations made to govern the procedure for employment of an employee. The rules and regulations are part of the terms and conditions of the employees’ employment which gives it statutory flavor. 

• Employment by a written contract of employment 

A contract of employment is defined as any agreement, whether oral or written, express or implied whereby one person agrees to employ another as a worker and that another person agrees to serve the employer as a worker.  An employer must give an employee a written contract within 3 months of the commencement of the employment. The contract must have certain key terms namely; the name of employer and employee, nature of employment, duration, wages, termination, etc. The provisions of the contract regulate the relationship between the employer and the employee

• Employment at will or servant holding an office at the pleasure of employer or Master and servant relationship 

Employment at will is when the employee holds an office at the pleasure of the employer. As the name suggests, this is a form of employment held at the will and caprices of the employer. Unlike employment with statutory favor, the continuous engagement of the employee is at the discretion of the employer. For example, a Minister of the Federal Republic of Nigeria is employed by the President and therefore he or she holds that office at the pleasure of the President.

Nigeria working hours

Normal working hours can be fixed by any of the following: 

• Mutual agreement.
•  Collective bargaining agreement within the organization or industry concerned.
•  An industrial wages board, where there is no collective bargaining procedure available.

The hours that an employee works in excess of the normal fixed working hours constitute overtime. A worker can opt-out of the working hours individually if their normal working hours are fixed by mutual agreement. A worker cannot opt-out individually where their working hours are fixed by a collective bargaining agreement. Any change must be agreed on collectively through the union and the organization or industry.

Overtime

As specified under the National Minimum Wage Act, Normal full-time working hours are forty hours per week. However, the Labor Act does not specify general working hours; rather these are fixed by the mutual agreement or collective bargaining within the enterprise or industry. Where there is no machinery for collective bargaining, the general working hours may be fixed by an industrial wages board. If the worker has to work more than the fixed normal working hours, it is considered overtime. There is no statutory provision on the overtime work limit and overtime pay. Overtime compensation is entirely a matter of mutual agreement (employment contract), collective bargaining agreement, or an order by the industrial wages board.

Vacation leave in Nigeria

A worker with a 12-month continuous period of employment is entitled to the following minimum annual paid holiday: Six working days, for persons under the age of 16 years (including apprentices). 12 working days. This excludes all public holidays. 

Annual leave must be taken at the end of the year in which it is earned however it can be deferred by mutual agreement provided that the holiday earning period must not exceed twenty-four months and the earned and deferred leave must be taken within 24 months.

Nigeria Maternity Leave

A pregnant employee is entitled to 16 weeks(4 weeks before birth and 12 weeks after birth) maternity leave if she provides a written medical certificate from a medical doctor stating that she should not or cannot work. Pregnant employees are entitled to at least 50% of their normal wages, provided that they have been employed for at least six months. Nursing mothers are allowed half an hour twice a day to attend to their babies. The Labour Act does not contain provisions on paternity leave. However, in Lagos State, civil servants are entitled to two weeks of paternity leave within the first two months from the birth of the baby.

Nigeria Severance Laws

Notice periods

Notice periods to be given by employees and employers are as follows:

Where the employee has been employed for less than three months, either party can terminate the contract by giving a minimum one-day notice. 

Where the employee has been employed for three months but less than two years, either party can terminate the contract by giving a minimum one-week notice.

Where the employee has been employed for two years but less than five years, either party can terminate the contract by giving a minimum of two-week notice. 

Where the employee has been employed for five years or more, either party can terminate the contract by giving a minimum of one-month notice. A notice of one week or more must be in writing.

Severance payments

Severance pay is often regulated by the contract of employment and sectoral collective agreements. Severance pay is generally calculated based on the worker’s length of service and last salary. There is no general statutory severance pay, although the Minister of Labour can enact regulations providing for severance pay to redundant workers.

Nigeria Tax

Foreign nationals who enter the country under a temporary work permit (that is, a permit granted to expatriates who intend to stay in Nigeria for a period not exceeding three months (see Visa)) and spend less than a cumulative period of 183 days per year in Nigeria are not liable to pay income tax on a pay as you earn (PAYE) basis. This is provided that their salaries are not recharged to the Nigerian employer company. Non-resident foreign nationals must pay withholding tax at rates of 5% to 10% on income received in Nigeria. The social security contributions that are deducted from workers’ salaries in Nigeria are as follows: National Housing Fund contribution. National health insurance scheme contribution. Life assurance premium. National pension scheme contribution. An employer must also pay a 1% social security contribution on its total payroll costs to the Industrial Training Fund and toward the employees’ compensation scheme.

Health Insurance Benefits in Nigeria

Sick pay must be paid by the employer. However, where the employer fails to pay or is insolvent, the employee can recover sick pay from the Nigeria Insurance Trust Fund Management Board, which manages the Employment Compensation Fund. Employees have the right to take time off in the case of illness or injury. The contract of employment may include specific provisions on sick pay. If not, an employee is entitled to the payment of wages for up to 12 working days in any calendar year during an absence from work caused by a temporary illness certified by a registered medical practitioner (Labour Act). The Employees Compensation Act makes provision for the payment of compensation to employees who suffer from work-related injuries or illnesses.

Additional Benefits in Nigeria

In the private sector, it is common to reward employees through either contractual or discretionary bonuses. These bonuses can take any of the following forms: 

Performance bonus. 

Overtime bonus. 

Christmas bonus. 

13th-month bonus. 

Sales bonus. 

Leave allowances. 

Study allowances.

Persons who work in the public sector are not entitled to bonuses, but only to benefits either for hard work or long-term commitment to public service.

General market practice benefits/additional allowances

A Rapidly Expanding and Young Population Already Africa’s most populous country by a long, long way with approximately 215 million inhabitants, the number of Nigerians is set to rise rapidly for the foreseeable future, with experts predicting that it will be the world’s third most populous country by 2050. Nigeria’s middle class is also growing. Today 23% of the total population are considered middle class and this is projected to increase. For businesses looking to expand into Nigeria, this of course means a large (and growing) consumer base with increased spending power.

• A Booming Economy

Nigeria also tops the list for Africa’s largest economy, largely thanks to its production levels of oil and gas, which are also the highest in the continent. Over the last ten years, the country has enjoyed average GDP growth of 6.9% and is now the biggest beneficiary of Foreign Direct Investment in Africa.

• A Surge in the Use of Technology

A recent report by Internet World has shown a huge increase in ‘Googling’ throughout the country, with Nigeria coming out the top. With IT and Software companies experiencing major growth, and Media and Professional services closely behind – it seems every sector is being well represented across this diverse country as it continues to develop at a very fast pace.

• Strong Links to the UK

Part of the British Empire until 1960, Nigeria and the UK still maintain strong ties and share a common language. Today Britain is one of the largest investors in Nigeria and enjoys investment incentives such as free trade zones and tax holidays. A large number of well-known British companies, including HSBC, Barclays, PZ Cussons, Cadbury, and Unilever, have already taken advantage of these.

Nigeria Holidays

There are about 11 public holidays in 2022:

New Year’s Day – Sat, 1 Jan 2022

Good Friday – Fri, 15 Apr 2022

Easter Monday – Mon, 18 Apr 2022

Labour Day – Sun, 1 May 2022

Eid al-Fitr – Likely 2–4 May 2022*

Democracy Day – Sun, 12 Jun 2022

Eid al-Adha – Likely 9–11 Jul 2022*

Nigerian Independence Day – Sat, 1 Oct 2022

Prophet’s Birthday – Likely 7–8 Oct 2022*

Christmas Day – Sun, 25 Dec 2022

Boxing Day – Mon, 26 Dec 2022

Why Choose WeHireGlobally

WeHG takes care of all the onboarding hurdles, payroll, compensation and benefits, tax filing, and termination of employment. Our Employer of Record solution allows you to manage your overseas teams efficiently while minimizing cost and risk.