Definitive Guide to Hiring in Nigeria

Hiring in Nigeria

Hiring employees compliantly in Nigeria means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Nigeria so that you don’t run afoul of employment laws. To hire an employee compliantly and offer them mandatory benefits and compliant agreements, you can:

(a) Establish your own new legal entity, banking, accounting and payroll service in Nigeria; or

(b) use an Employer of Record like Global Expansion who can handle all of the details for you.

Labor Laws in Nigeria

Employment laws in  Nigeria are uniquely suited to the country’s way of life, and crucial to understand if you want to employ local talent in this country. Get the details on  Nigeria employment laws and Nigeria policies here.

Employee Probation Period

• The law does not prescribe the maximum length of probation periods.
• But in practice, probationary periods for employees is between three (3) and six (6) months

Annual Leave in Nigeria

• A worker is entitled to annual leave of at least six working days with full salary.
• The annual leave is increased to at least twelve working days for young workers (under sixteen) including apprentices.
• A worker must have worked for at least twelve months in order to qualify for annual leave.

Holidays in Nigeria

Workers are entitled to paid holidays during Festival (public and religious) holidays. These include memorial holidays and religious holidays (Christian origin).

Here is the full list of public holidays in Nigeria:

Maternity Leave Nigeria

• Female employees are generally entitled to 12 weeks of maternity leave at 50% of pay

Paternity Leave Nigeria

• Paid paternity leave is available in the Lagos and Enugu States of 2 weeks and 3 weeks respectively.

Sick Leave in Nigeria

• In general, employees are entitled to 12 days of paid sick leave per year.

Working Hours in Nigeria

• As specified under the National Minimum Wage Act, Normal full time working hours are forty hours per week.
• The labor law requires one 24-hour rest period every seven days and a one-hour break per six hours of work.

Overtime in Nigeria

• Employers are required to pay these workers minimum wage and overtime pay if they work more than 40 hours in a week.
• Under the Fair Labor Standards Act, employees must be paid one-half more than their hourly rate for overtime pay.

Termination of Employment in Nigeria

• The contract of employment may be terminated by either party at any time, with or without any reason by either party giving the notification period provided in the contract.
• A contract of employment is terminated by the expiry of the period for which it was concluded, death of the worker before expiry of contract and by giving a notice for a period specified under the law.
• The required notice period for the termination of the employment contract depends on length of service.
• For a worker employed for three or more months, the employer is not liable to make any payment for a period during which the worker is absent from work with the leave granted by the employer at the request of the worker.
• Payments owed to the worker must be paid on or before the expiry of notice period.
• Right to notice may be waived by either party and payment in lieu of notice is acceptable. It is calculated by taking basic salary into an account and excluding overtime and other allowances.
• A court decision of 1967 states that summary dismissal is warranted if an employee’s conduct is of some grave and weighty character that it undermines the relationship of confidence which must exist between a master and a servant.
• The examples of such grave character include verbal or physical violence, assault on employer, intoxication during working hours, stealing, fraud, bribery, or corruption, etc.
• The employer cannot terminate the employment contract without prior notice except in cases specified by the law, otherwise it is treated as fundamental breach of contract.
• Employer in not obliged by the law to make any severance payment.

Notice Period in Nigeria

• The required notice period for the termination of the employment contract depends on length of service.
• The notice period is as follows: -
  • one day for a period of three months or less
  • one week for more than three months but less than two years of service
  • two weeks for two to five years of service and
  • one month for five or more years

Severance in Nigeria

• There is no statutory severance pay.

Nigeria Salary and Wages

13 / 14th Month Salary in Nigeria

• Yes
• There is no statutory requirement to pay the 13th or 14th month salary.
• However, in some states the governors have made it mandatory but it is not a nation wide requirement.
• Despite this, through collective bargaining and companies' culture, the payment of the 13th month is widely observed.

Pension

• The mandatory minimum contribution to the Nigerian Pension Scheme is 18% of an employee’s monthly emoluments. Employers and employees are required to make contributions of 10% and 8%, respectively.
• Monthly emoluments are total emoluments as may be defined in the employee’s employment contract but cannot be less the sum of basic salary, housing allowance and transport allowance.

National Housing Fund

• Nigerian employees earning a basic salary of NGN3,000 or more per year must contribute 2.5% of their basic salary to the National Housing Fund.

Immigration Nigeria

• Temporary work permit (TWP) visas are issued to expatriates with specialized skills for work on short-term specific projects that are based in Nigeria.
• The TWP visa application process is initiated in Nigeria by obtaining a TWP cable approval from the headquarters of the NIS.
• Specific information about the expatriate, including a copy of the international passport data page, the nature of assignment to be performed and country of visa application must be well articulated in the application.
• On approval of the CG of the NIS, a TWP cable approval is issued for presentation at the relevant Nigeria consulate abroad.
• TWP is valid for sixty (60) days
• The following documents are generally required to process a TWP visa application:
  • Completed visa application form
  • Copy or original TWP cablegram as approved by the CG of the NIS
  • Letter of invitation or visa application letter (to be provided by the host company on its letterhead and addressed to the specific Nigerian consulate abroad)
  • Acknowledgment receipt confirming payment of visa fee
  • Postal order made payable to the Nigeria consulate office and additional administrative charges for express service (this may not apply to all Nigerian consulates)
  • International passport with a minimum of six months’ validity and with two blank facing pages
  • Return flight ticket
• The subject-to-regularization (STR) visa is issued to expatriate assignees (including their dependents if applicable) who will be coming to work and live in Nigeria on a long-term basis.
• Expatriate assignees on this work visa platform are expected to be placed in the host company’s approved Expatriate Quota (EQ) positions.
• STR visas are granted for three months
• On arrival in Nigeria, a Combined Resident Permit and Alien Card (CERPAC) is issued to an expatriate assignee as a temporary resident permit receipt.
• Subsequently, a Green Card, which is a permanent resident permit, is expected to be issued within 90 days.
• Applications for STR visas must be supported with quadruplicate copies of the following documents, stamped by the appropriate Nigerian consulate in the applicant’s home country or country of residence:
  • Completed visa application form (Form IMM/22)
  • Credentials and academic qualifications or certificates
  • Valid EQ approval letter
  • Business permit and certificate of incorporation of the host company
  • Offer of employment letter
  • Acceptance of employment letter
  • Board of directors’ resolution (applicable if roles are to be assigned for senior management positions, such as Managing Director, Chief Executive Officer and General Manager)
  • Letter of invitation or visa application letter (to be provided by the host company on its letterhead and addressed to the specific Nigerian consulate abroad)
  • Acknowledgment receipt confirming payment of visa fee, as well as a postal order made payable to the Nigeria consulate for additional administrative charges and express service (this may not apply to all Nigerian consulates)
  • International passport with a minimum of six months’ validity and with two blank facing pages

Value Added Tax (VAT) in Nigeria

• The main VAT rate in Nigeria is 7.5% (raised from 5% on 1st February 2020).
• Only a limited number of supplies are nil-rated meaning any VAT suffered may be re-credited to the tax payer

Mandatory Benefits in Nigeria

• These are mandatory benefits as postulated by law
• These include probationary period, annual leave, public holidays, sick leave, maternity leave, paternity leave, overtime pay, and notice period.
• Mandatory benefits also include social security benefits.

Payroll Accrual in Nigeria

Country Accruals Additional Information

Description

The Pension Act signed on 1 July 2014 provides that employers with at least 15 employees are required to participate in a contributory pension scheme for their employees.

The minimum contribution under the Act is 18% of monthly emolument (with a minimum contribution of 10% by the employer and 8% by the employee). If the employer decides to bear all the contribution, the minimum contribution is 20% of monthly emolument.

Mandatory and/or voluntary contributions by the employers and employees are deductible for tax purposes. The Act also requires every employer to take out life insurance coverage for its employees. NHF contributions are applicable to Nigerian employees earning a minimum of NGN 3,000 per annum.

The employer is required to deduct 2.5% of basic salary from employees earning more than NGN 3,000 per annum and remit it to the Federal Mortgage Bank of Nigeria within one month of deduction.

Payroll Accruals Additional Information

Accrued Benefits in Nigeria

Why use Global Expansion to hire in Nigeria

Establishing a branch office or subsidiary in Nigeria can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Nigeria labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Nigeria law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into Nigeria. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our Nigeria Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.