Hire Employees in Nigeria

Your own entity is normally a company limited by shares registered with the CAC, with a minimum share capital requirement where there is foreign participation and registration with the NIPC.

An Employer of Record inverts the sequence: the Nigerian entity signs the contract, registers the employee with a licensed pension fund administrator, remits NSITF and ITF and files PAYE with the correct state authority, while you direct the day-to-day work.

Nigerian employment law distinguishes sharply between employees covered by the Labour Act, manual and clerical roles, and everyone else, whose position is governed by contract alone. Establishing which applies is the first question, not a detail.

Nigeria's three employer levies each use a different base, and that is where cost models go wrong. Pension is 10% of basic, housing and transport, not gross. NSITF is 1% of the full gross. The ITF levy is 1% of the annual payroll and applies to employers with five or more employees or a turnover of NGN 50 million or more. Applying one base to all three misstates every line.

Total employer cost lands around 11–12%, which is moderate. Nothing is capped, so the percentage holds at every salary level.

PAYE goes to the state, not the federal government, and it goes to the state where the employee resides. For a distributed team that means multiple state revenue authorities, each with its own filing portal and cadence. Remitting to the wrong state is a common and awkward error to unwind, because the receiving state will not simply transfer it.

The Nigeria Tax Act 2026 reshaped personal taxation, exempting the first NGN 800,000 and introducing a rent relief. It also made the NHF contribution voluntary for private sector employees, which reverses a long-standing deduction, payroll configured before 2026 is still deducting it.

Break-even rule of thumb: EOR fees begin to exceed the running cost of a small Nigerian entity somewhere between 15 and 20 employees. Model both before committing, see EOR vs Entity for the full comparison, and plan any later migration so employees keep seniority.

Three employer levies, three different bases, and that is where cost models go wrong. Pension is 10% of basic, housing and transport rather than gross. NSITF is 1% of the full gross. The ITF levy is 1% of annual payroll and applies to employers with five or more employees or turnover of NGN 50 million or more.

Total employer cost lands around 11% to 12%. Nothing is capped, so the percentage holds at every salary level.

The NHF position reversed in 2026. The 2.5% National Housing Fund contribution is now voluntary for private-sector employees while remaining compulsory in the public sector, a change made by the Business Facilitation (Miscellaneous Provisions) Act 2023 rather than by the Nigeria Tax Act, though several current guides still describe it as mandatory throughout. Payroll configured before 2026 is still taking it, and the employee is entitled to the difference.

The headcount gates differ by fund, which catches growing employers. Pension becomes mandatory at three employees and ITF at five (or NGN 50 million turnover), while NSITF has no threshold at all and applies from the first hire. Separately, from 1 January 2026 the Nigeria Tax Act 2025 abolished the Consolidated Relief Allowance and replaced it with rent relief of 20% of annual rent capped at NGN 500,000, alongside a nil band on the first NGN 800,000 and a flat NGN 4,000 Development Levy. Payroll still applying CRA is non-compliant, and some published Nigerian calculators continue to do so.

Four representative profiles, costed with the 2026 contribution rates above. Salaries are illustrative market midpoints, not GX operating data, use them to see how the on-cost percentage behaves as pay rises, not as a salary benchmark for a specific role. For real market data on your roles, ask for a costing.

Nothing here is capped, so the on-cost percentage is identical at every salary level. A senior hire costs proportionally exactly what a junior one does, which is not true in most comparable markets and makes salary the only variable worth modelling.

Four representative profiles costed on 2026 statutory rates. Salaries are illustrative market midpoints, not GX operating data.

Payroll runs monthly in naira. Pension contributions are remitted to the employee’s chosen PFA within seven working days of salary payment, and PAYE by the tenth of the following month.

PAYE goes to the state where the employee resides, not to the federal government. For a distributed team that means multiple state internal revenue services, each with its own portal, filing format and audit posture. Remitting to the wrong state is awkward to unwind because the receiving state will not transfer it.

The Nigeria Tax Act 2026 reshaped personal taxation, exempting the first NGN 800,000 of annual income, introducing a rent relief capped at NGN 500,000 and setting progressive rates from 15% to 25%. Payroll built on the previous consolidated relief allowance structure needs rebuilding rather than adjusting.

Thresholds and ceilings are uprated periodically, so a figure correct in January may not hold later in the year. Where a row below is flagged, published sources disagreed and the conflict is recorded rather than resolved.

Thresholds move on a local cycle that does not always fall in January, so a figure correct at the start of the year may not hold through it. Where a row below carries a flag, published sources disagreed and the conflict is recorded rather than resolved, there are 1 such rows on this page.

The sections that follow set out contracts and probation, working time, leave, termination and immigration in that order. Where an entitlement comes from a collective agreement rather than statute it is marked as such, because that distinction determines whether it is negotiable.

A written statement of terms must be provided within three months of the start date for employees covered by the Labour Act. For everyone else the contract governs entirely, which makes a thin contract a genuine exposure.

Probation is contractual rather than statutory, commonly three to six months. It does not suspend the pension obligation, which applies from the first month of employment.

Because senior and professional staff sit outside the Labour Act, their notice, severance and redundancy terms come only from the contract and any staff handbook incorporated into it. The National Industrial Court has nonetheless been willing to find unfair dismissal where a termination was procedurally arbitrary, applying international best practice alongside Nigerian law.

Normal hours are fixed by agreement, collective bargaining or industrial wages board rather than by a single statutory cap. Overtime rates are contractual. That flexibility makes the written contract the operative document for working time.

Overtime is where payroll disputes usually start. Record hours from day one even where the role is salaried and the expectation is that overtime will not arise, reconstructing records after a complaint is far harder than keeping them.

Overtime is where payroll disputes usually begin, and the burden of proving hours worked generally sits with the employer. Record hours from the first day even for salaried roles where overtime is not expected, reconstructing a record after a complaint is considerably harder than keeping one.

Public holidays sit on top of the annual leave entitlement. Where a holiday falls at a weekend, practice varies, some markets move it, some grant a substitute day and some do neither, so check the position before assuming a day in lieu.

The 13 dates below are the statutory position. Employers in many markets grant more by policy or collective agreement, and sector agreements sometimes add local or patronal days that do not appear in a national list.

Nigeria observes 13 paid public holidays in 2026. Dates that fall at a weekend and any substitution rules are set out below; entitlement is separate from annual leave.

Maternity: 12 weeks under the Labour Act. At least 50% of wages where the employee has 6 months of service. Many employers and some states provide more. Paternity: Not a general federal entitlement. Provided by some states and by contract; Lagos and the federal civil service offer periods of paid leave. Sick leave: Up to 12 working days a year. Paid, on production of a medical certificate. Nursing breaks: 30 minutes twice a day. Paid, while nursing.

Public holiday work: As declared federally. Compensation is contractual.

The question that matters for budgeting is who funds each entitlement. Where the state or a social insurance fund pays, the employer carries administration but not cost; where the employer pays, it is a direct charge that headcount models routinely omit. Both patterns appear above.

Nigeria distinguishes sharply between employees covered by the Labour Act and those who are not. The Act covers manual labour and clerical roles; managerial, professional and senior staff fall outside it and are governed by their contract alone.

For covered employees, notice runs from one day in the first three months to one month after five years. For everyone else, the contract governs entirely, which means the contract is doing all the work and a thin one leaves both sides exposed.

There is no statutory severance or redundancy payment in Nigeria. Redundancy terms come from the contract, the staff handbook or a collective agreement, and the Labour Act requires only that the employer inform the union, adopt a last-in-first-out principle and negotiate redundancy payments, without specifying an amount.

The National Industrial Court applies international best practice alongside Nigerian law and has been willing to find unfair dismissal where a termination was procedurally arbitrary, even for senior staff outside the Act.

A foreign national needs an expatriate quota position held by the employer before anything else. The quota is granted by the Ministry of Interior against specific roles and a stated duration, and it is the binding constraint rather than the visa.

With a quota position in place the employee obtains a Subject to Regularisation visa, enters Nigeria, and regularises to a CERPAC residence and work card within ninety days.

Allow two to three months, and start with the quota. Employers frequently discover late that no quota position exists for the role they have offered, and obtaining one is a separate application with its own timeline.

The state PAYE question is the most common and most awkward failure. Remitting to the wrong state creates a liability in the correct one while the incorrect payment sits with an authority that will not release it, and both states can assess.

Three different contribution bases is the second. Pension on basic, housing and transport; NSITF on full gross; ITF on annual payroll. A single base applied across all three misstates every line.

Practical controls: confirm each employee’s state of residence and remit accordingly, configure three separate bases, remove the NHF deduction for private sector employees following the 2026 change, and settle whether each role sits inside or outside the Labour Act before drafting the contract.

Work backwards from the start date. For a Nigerian national through an EOR, one to two weeks is realistic. A foreign national needs an expatriate quota position held by the employer, then a Subject to Regularisation visa and CERPAC, adding two to three months.

Confirm before making an offer: which state the employee will reside in, because that determines where PAYE is remitted; whether the role sits inside or outside the Labour Act, since that decides whether statutory notice applies at all; and what the contract says about redundancy, because statute says nothing.

Pension registration with a licensed PFA must precede the first payroll, along with NSITF and, where the thresholds are met, ITF. Configure three separate contribution bases, basic-housing-transport for pension, full gross for NSITF, annual payroll for ITF, rather than one.