Nigeria

Nigeria PEO & Employer of Record

WeHG provides an International PEO and global Employer of Record service in Nigeria to companies willing to enter the Nigerian market or hire local/expat employees in this country.

Traditional approach requires establishing a subsidiary in Nigeria.  However, our solution allows you to set up the operations in Nigeria within days hence save time and money.  WeHG would hire candidates on your behalf while you maintain total operational control of their work. It means that legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf.

Nigeria fast facts

Population, million: 206
Land area: 923,769 km²
Capital: Abuja
Local currency: Naira (₦) (NGN)

GDP per capita:$ 2,149
GDP in currency:$ 443 billion

Nigeria, country located on the western coast of Africa. Nigeria has a diverse geography, 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, Fula, Hausa, Edo, Ibibio, Tiv, and English. The country has abundant natural resources, notably large deposits of petroleum and natural gas.

The national capital is Abuja, in the Federal Capital Territory, which was created by decree in 1976. Lagos, the former capital, retains its standing as the country’s leading commercial and industrial city.

Modern Nigeria dates from 1914, when the British Protectorates of Northern and Southern Nigeria were joined. The country became independent on October 1, 1960, and in 1963 adopted a republican constitution but elected to stay a member of the Commonwealth.

Hiring, Negotiating and Doing Business in Nigeria

Necessity of written employment contract

Contract of employment is defined under section 91 of the Labour Act 2004 as “an agreement whether oral or written, express or implied whereby one person agrees to employ another as a worker and that person agrees to serve the employer as a worker”.

In Nigeria, with the requirement of the laws that guide employee/employer relationship, a contract of employment must be signed and agreed by parties to the contract, when signed it becomes binding on the parties. Where there is a breach of the contract, the aggrieved party can enforce his rights at the National Industrial Court within the jurisdiction of the aggrieved party.

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

There is no express statutory distinction between different categories of workers in Nigeria. The Employees Compensation Act and the Labour Act use the words “employee” and “workers”, respectively, to cover any person who is employed. However, apprentices, domestic servants and young persons are classified as special workers under the Labour Act. Young persons and women employees cannot be engaged in night work, subject to certain exceptions stated in the Labour Act. 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 engaged by an employer to carry out a specific type of work. An independent contractor is not under the control of the employer and performs their job as a professional. By contrast, an employee is engaged to provide services under the control of the employer.

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 job as an employee under the control of an employer will be regarded as an employee under the law, and not as an independent contractor.

Nigeria Employment Contract

Types of employment agreements

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

  • Employment which is governed by statute

This is an employment with statutory flavour. An employment is said to have a statutory flavour when the appointment and termination is 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 flavour.

  • Employment by 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 other 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; 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 pleasure of employer or Master and servant relationship

An employment at will is when the employee holds an office at the pleasure of the employer. As the name suggest, this is a form of employment held at the will and caprices of the employer. Unlike employment with statutory favour, 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 organisation 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 organisation or industry.

Overtime

As specified under the National Minimum Wage Act, Normal full time working hours are forty hours per week. However, the Labour 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 as an 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.

Nigeria Maternity Leave

A pregnant employee is entitled to 12 weeks’ 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 ten days’ 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 two-week notice.
  • Where the employee has been employed for five years or more, either party can terminate the contract by giving a minimum 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 186 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 – Standard Bank, a South African chain which operates across the continent, estimates that it grew by over 600 percent between 2000 and 2014. Today 4.1 million Nigerian households, or 11% of the total population, are considered middle class and a further 7.6 million households will join them by 2030, according to Standard Bank’s predictions. 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 an 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 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 British Gas, HSBC, Barclays, PZ Cussons, Cadbury and Unilever, have already taken advantage of these.

Nigeria Holidays

There are about 13 public holidays per year:

  • New Year’s Day
  • Good Friday
  • Easter Monday
  • Workers’ Day
  • Id el Fitr
  • Id el Fitr holiday
  • Democracy Day
  • Id el Kabir
  • Id el Kabir additional holiday
  • National Day
  • Id el Maulud
  • Christmas Day
  • Boxing Day

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.

FAQ Nigeria

  • Working hours in Nigeria

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

    • Mutual agreement.
    • Collective bargaining agreement within the organisation or industry concerned.
    • An industrial wages board, where there is no collective bargaining procedure available.
  • What are the main holidays in Nigeria?

    • New Year’s Day
    • Good Friday
    • Easter Monday
    • Workers’ Day
    • Id el Fitr
    • Id el Fitr holiday
    • Democracy Day
    • Id el Kabir
    • Id el Kabir additional holiday
    • National Day
    • Id el Maulud
    • Christmas Day
    • Boxing Day
  • What are payroll taxes in Nigeria?

    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.

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