Employer of Record in Nigeria

Grow your team and business in Nigeria with Velocity Global’s Employer of Record. Our Global Work Platform™ and Employer of Record in Nigeria manage all of your business’ hiring, payroll, taxes, immigration, and benefits. With our unique expertise, we make it simple for you to hire distributed teams anywhere in the world.

Benefits of hiring in Nigeria

• Nigeria is the most populous country in all of Africa, with a count of 225 million people. It’s the continent’s economic powerhouse in terms of GDP, with $1 trillion and the 25th-largest economy in the world.
• Nigeria’s public debt to GDP ratio remains one of the lowest among countries in its peer group, such as Ghana and Kenya. Nigeria’s ratio rests within the recommended maximum for similar countries by the International Monetary Fund and the World Bank.
• Nigeria’s banking sector is becoming highly attractive to foreign investment as it is valued at over $9 billion and the country has more than 200 fintech companies.
• Nigeria’s well-known sectors include its abundance of natural resources. Nigeria is the largest crude oil producer in Africa. The country has considerable hydrocarbon resources and it’s the fifth-largest cocoa producer in the world.

Challenges of hiring in Nigeria

• Nigeria’s unemployment, underemployment, and poverty rates have remained high, escalating a movement of young talent to better economic conditions elsewhere.
• Nigeria’s economy is significantly dependent on its oil reserves, which account for 80% of its exports and 50% of its tax revenues. As economies shift and climates change, Nigeria may have issues in the future with an unstable international oil market.
• There is a lack of economic diversification in Nigeria and the country has insufficient agricultural production due to the absence of adequate transport infrastructure and electricity generation.

Cultural nuances and must-knows of doing business in Nigeria

• It is commonplace in Nigerian business culture to greet colleagues with a handshake and an enthusiastic salutation or welcome.
• The majority of businesses in Africa are family-owned and operated. Considering the incentives that drive these businesses and being aware of family dynamics will make you aware of potential conflicts and partnerships that can arise.
• Business is trust and relationship-oriented in Nigeria. Face-to-face meetings and speaking on the phone are preferred over written communication.
• Nigerian business culture is hierarchical. Respect is an important value embedded into everyday Nigerian life. Being aware of the general age and professional position of your colleagues will be helpful in understanding Nigerian work environments.
• When doing business in Nigeria it’s strategic to thoroughly evaluate and investigate new business partners and prospects to ensure they align with your organization’s values.

Minimum wage and salaries in Nigeria

• Beginning in 1981, Nigeria has ratified four national minimum wage acts. The most recent in 2019, signed into law by President Muhammadu Buhari, increased the minimum wage in Nigeria to NGN 30,000 (USD 71.11) per month.

Probation period in Nigeria

• There is no legal requirement for a probation period in Nigeria. However, they are permissible and the length is agreed upon between the employer and employee.

Bonus payment in Nigeria

• There are no legal obligations for employers to reward employees with a contractual or discretionary bonus. However, bonuses are customary at the inclination of the employer.

Onboarding in Nigeria

• In Nigeria, a written employment agreement, signed by both employer and employee, is mandatory by law. Employment agreements must include the following information:
  • Names of the employer and employee
  • Employee’s address
  • Position title and description of work
  • Beginning date of employment
  • End date of employment, for a fixed-term contract
  • Notice period for termination
  • Salary, including frequency of payment
  • Work hours
  • Leave pay and conditions for incapacity due to illness or injury
  • Any special conditions

Termination and notice period in Nigeria

• In Nigeria, the law distinguishes an important difference between termination and dismissal. Dismissal is a severe sanction from the employer and it indicates an egregious infraction by the employee. Termination is ending the employment relationship, where either the employer or employee can discontinue it.
• Notice periods in Nigeria differ depending on an employee’s length of service. They are as follows:
  • One day of notice for less than three months of service
  • One week of notice for three months to two years of service
  • Two weeks of notice for two to five years of service
  • One month of notice for five years or more of service
• Employers may give salary in lieu of notice.
• There is no statutory requirement for severance pay in Nigeria. However, it is determined by negotiation in an employment contract and collective agreements.

Annual leave in Nigeria

• The Nigerian Labor Law states that after 12 months of continuous service, employees are entitled to at least six days of annual leave. In the case of apprentices and employees under the age of 16 years, they are entitled to 12 days of annual leave in Nigeria.

Parental and maternity leave in Nigeria

• Maternity leave is provided under the Nigerian Labor Act. Provided that employees have worked for at least six months with their employer, they are entitled to six weeks before childbirth and six weeks afterwards. Employees must receive a medical examination from a registered medical practitioner within six weeks of the due date, in order to qualify for maternity leave in Nigeria. Employees are entitled to no less than 50% of their regular wages during maternity leave. Employees are given half an hour, twice a day during working hours to nurse their newborns.
• Paternity leave is not provided under the Nigerian Labor Act. However, in 2021 the Federal Executive Council approved a paternity leave of 14 days for employees in the public sector. Paternity leave pay is negotiated in an employment contract.

Sick leave in Nigeria

• The Nigerian Workmen’s Compensation Act designates a maximum of 12 paid leave days a year due to temporary illness. Employees must receive a medical practitioner’s certification to claim sick leave in Nigeria.

Regional and national holidays in Nigeria

• Nigeria has 13 public holidays in a calendar year, which are not included in the minimum paid leave entitlement and are taken in addition to annual leave. The following are national holidays in Nigeria:
  • New Year’s Day (January 1)
  • Good Friday (March or April, the specific day fluctuates each year)
  • Id el Fitri (March or April, the specific day fluctuates each year)
  • Id el Fitri Holiday (March or April, the specific day fluctuates each year)
  • Easter Monday (April, the specific day fluctuates each year)
  • Labor Day (May 1)
  • Id el Kabir (May, June, or July, the specific day fluctuates each year)
  • Id el Kabir Holiday (May, June, or July, the specific day fluctuates each year)
  • Democracy Day (June 12)
  • Id el Maulud (August, September, or October, the specific day fluctuates each year)
  • National Day (October 1)
  • Christmas Day (December 25)
  • Boxing Day (December 26)

• Nigeria’s government benefits programs are administered by a couple of its government agency authorities. The Federal Ministry of Employment and Labor provides overall general supervision and administration of cash benefits to Nigerian residents. The Federal Ministry of Health and the National Health Insurance Scheme provide and administer general health benefits and procedures to Nigerian residents. Health maintenance organizations collect contributions from employers and employees to maintain the Nigerian Social Security scheme, which maintains pensions, survivor benefits, short-term disability, long-term disability, health care, and paid leave entitlements.

• Individuals are considered residents when they stay in Nigeria for at least 183 days in any 12-month period.
• Individuals, who stay in Nigeria with a temporary work permit and spend less than a cumulative 183 days per year, are not liable to pay Nigerian income tax.
• Non-residents are legally obligated to pay a withholding tax at rates of 5% to 10% on income received in Nigeria.
• Nigerian residents are lawfully required to pay income tax on their global income.

Tax thresholds in Nigeria

• As of 2022, the Nigerian income tax brackets are:
  • First NGN 300,000: 7%
  • Next NGN 300,000: 11%
  • Next NGN 500,000: 15%
  • Next NGN 500,000: 19%
  • Next NGN 1,600,000: 21%
  • Above NGN 3,200,000: 24%
• The corporate income tax rate in Nigeria is 30%.

Health insurance in Nigeria

• Nigeria’s healthcare system was once comparable to the rest of the world in the 1970s and 1980s. However, due to a shortage of medical professionals, severe underfunding, a low insurance coverage rate, and poor data collection, it’s now one of the world’s least powerful. Nigerian government spending on healthcare is below average across the Sub-Saharan region.
• The United States International Trade Administration reports that Nigeria’s healthcare infrastructure is underdeveloped and it’s in need of modern medical facilities. Nigeria’s healthcare indicators are rated as some of the worst in Africa.
• According to the World Health Organization, medical professionals are in short supply, with only about 35,000 doctors despite needing 237,000.
• The World Bank’s latest data from 2019 shows over 70% of healthcare spending in Nigeria is out-of-pocket, meaning most Nigerians don’t have health insurance and access to quality healthcare is limited.

Pension in Nigeria

• Employees in Nigeria are subject to eligibility requirements for the state’s old-age retirement pension. Qualifying conditions for the state’s old-age pension include being at least 50 years of age. The pension in Nigeria is calculated based on the insured employee’s account balance and life expectancy. There are two payment options for the pension: purchase an annuity or make scheduled withdrawals.

• Payroll in Nigeria is tricky. However, with the help of an employer of record in Nigeria, your payroll is processed compliantly and on time.

Tax due dates in Nigeria

• In Nigeria, the tax year is the calendar year. Tax returns need to be filed no later than May 31.

Payroll cycle in Nigeria

• The payroll cycle in Nigeria is weekly, bi-weekly, or monthly, where payments are made once a month.

Average working hours in Nigeria

• The Nigerian Labor Act designates normal working hours to be written in the employment contract and established by mutual agreement, collective bargaining, or an industrial wages board. The length of a general workday is usually defined by a business’ policy.

Overtime in Nigeria

• In Nigeria, overtime is considered time worked in excess of normal business hours. As compensation for overtime, employees receive extra payment or leave in lieu of payment. At the very least, an employee’s overtime pay is equal to their hourly wage. There isn’t a maximum number of overtime hours per month, as long as employees are permitted their statutory periods of leave and rest.