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Hiring in Nigeria? Read on to find out the employment norms (like taxes, payroll and benefits) and EOR (Employer on Record) norms in Nigeria.
Employment norms in Nigeria
Nigeria is one of the largest economies in Africa. It is also one of the most populous countries making it a good destination for business expansion. However, employment and labor laws in Nigeria can be complex for new employers to navigate through. EOR services bridge this gap and assist employers with employee management, payroll, taxes, etc., ensuring legal compliance.
General Information:
- The Nigerian currency is Nigerian Naira (NGN).
- Abuja is the capital of Nigeria.
- English is the language of Nigeria. Documentation must be in English to be considered legally valid.
- As of 2021, the of Nigeria was reported to be USD 440.83 billion.
Nigerian labor law usually sets the standards for federal labor laws. Individual state laws and collective agreements also determine many norms.
Table of Contents
- Agreements
- Onboarding Process
- Visa
- Minimum Wage
- Payroll Cycle
- Annual Bonus
- Health Benefits
- Working hours and overtime
- Leaves
- Social Security
- Taxes for employers
- Taxes for employees
- Probation
- Termination
- Severance Pay
- Employees or Contractors
- Final Words
AgreementsOnboarding ProcessVisaMinimum WagePayroll CycleAnnual BonusHealth BenefitsWorking hours and overtimeLeavesSocial SecurityTaxes for employersTaxes for employeesProbationTerminationSeverance PayEmployees or ContractorsFinal Words
Agreements
- The agreements and contracts must be in writing.
- Employees can be associated with unions and have collective bargaining agreements or individual employment agreements.
- The agreements must state the term of the contract (fixed or indefinite), nature of work, compensation, notice period, severance, etc.
- Contracts and agreements must be in English for legal purposes.
Onboarding Process
- The employer must give the employee a written statement of the contract within 3 months of beginning employment.
- The employee must be enrolled in the mandatory social schemes as per the industry and local laws.
- The employer is responsible for withholding and paying taxes on the employee's behalf. The employer must ensure that the employee is registered with the relevant tax authorities.
Visa
Work Visa:
- An STR visa is required to work in Nigeria. The following documents are required for application -
- A formal application from the Nigerian employer
- Proof of adequate financial means
- A job offer letter and job acceptance letter
- Expatriate quota approval
- Visa application form and other application requirements
- To live in Nigeria, a CERPAC card is needed. CERPAC cards are valid for 2 years and have to be renewed for an increased period of stay. For a CERPAC card, an applicant requires -
- A letter from the Nigerian employer requesting a legal stay for the employee as well as accepting Immigration Responsibility
- Employment and job offer acceptance letters
- Expatriate quota approval proof
- Employee's passport with STR visa approval
- Business Permit
- Other application requirements
Business Visa:
For a business visa, the following documents are required
- Application letter
- Proof of adequate finances
- Copies of airplane tickets (arrival and return)
- Invitation letter from the company in Nigeria
- Corporate Affairs Commission Certificate from the company in Nigeria
- Other requisite application documents
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Minimum Wage
The wage in Nigeria is NGN 30,000 per month.
Payroll Cycle
The cycle in Nigeria can be weekly, bi-weekly, or monthly. It is usually decided in the agreements.
Annual Bonus
There is no mandatory bonus. However, an additional month's salary (13th month's salary) is commonly paid as an annual bonus.
Health Benefits
- It is mandatory for the employer to provide health insurance in Nigeria.
- The NHIS (National Health Insurance Scheme) provides health services at affordable rates. It covers most medical ailments; including primary care, specialist care, and emergency conditions.
- Employers can choose to provide additional private health insurance for their employees.
Working hours and overtime
- Work hours: A typical work week in Nigeria consists of 48 hours with an 8-hour work day
- Break: A one-hour break is to be provided per day.
- Overtime: The overtime pay is to be decided upon in the agreement.
Leaves
Sick Leave
Employees are entitled to up to 12 days of paid sick leave in Nigeria. A medical certificate is required for a continuous leave of more than 2 days.
Parental Leave
- Maternity leave: Female employees in the private sector can avail of up to 12 weeks of maternity leave with half pay. Public sector employees receive a fully paid maternity leave of up to 16 weeks. The employee must have worked for at least 6 months to avail of this.
- Paternity leave: Public sector employees are entitled to 10 to 14 days of paternity leave (depending on the state). There is no mandatory paternity leave for the private sector. However, many companies choose to incorporate paternity leaves into their agreements.
- Maternity and paternity leave payments should be made by the employer.
Annual Leaves
Employees working for at least 12 months are entitled to 6 days of annual leave.
Public Holidays (for the Calendar year 2023)
- New Year's Day (January 1)
- New Year Holiday (January 2)
- Good Friday (April 7)
- Easter Monday (April 10)
- Id El Fitri (April 21)
- Id El Fitri Holiday (April 22)
- Labor Day (May 1)
- Democracy Day (June 12)
- Id El Kabir (June 28)
- Id El Kabir holiday (June 29)
- Id El Maulud (September 27)
- National Day (October 1)
- National Day holiday (October 2)
- Christmas Day (December 25)
- Boxing Day (December 26)
(Some dates may change according to traditional calendars.)
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Taxes for employers
Employers in Nigeria contribute around 12% of the employee's gross salary as payroll taxes. The following is the breakdown of the payroll taxes for employers in Nigeria -
- Pension (for employers having more than 15 employees) - 10%
- National Social Insurance Trust Fund (NSITF) - 1%
- Industrial Training Fund (for employers having more than 5 employees or an annual turnover of at least NGN 50 million) - 1%
- National Health Insurance Scheme (NHIS) - 10% (for Organized Private Sector companies with 5 or more employees)
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Taxes for employees
Income tax:
The following are the tax brackets in Nigeria.
- Up to NGN 300,000 - 7%
- NGN 300,000 to NGN 600,000 - 11%
- NGN 600,000 to NGN 1,100,000 - 15%
- NGN 1,100,000 to NGN 1,600,000 - 19%
- NGN 1,600,000 to NGN 3,200,000 - 21%
- Above NGN 3,200,000 - 24%
Social tax:
The following are employee payroll contributions in Nigeria.
- Pension - 8%
- Housing Fund - 2.5%
- National Health Insurance Scheme (NHIS) - 5% (for Organized Private Sector companies with 5 or more employees)
Probation
The period is negotiated in the agreement. There are no specific laws for probation. Usually, a 3-month probation period is common.
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Termination
- Employment agreements can be terminated by either party.
- The notice period is stipulated in the agreement or determined by the period of service of the employee.
- For up to 3 months of service - one day
- Up to 2 years of service - one week
- 2 to 5 years of service - two weeks
- For service of 5 years or more - one month
Severance Pay
There is no mandatory requirement for severance pay. It is negotiated in employment agreements.
Employees or Contractors
- Employees and contractors in Nigeria enjoy most of the rights given by the Labor Code. However, the two are treated as different entities.
- Misclassification of the two would lead to penalties for the employer.
Final Words
Being one of the most populous countries in Africa, Nigeria offers many skilled workers. The country's high GDP in the region only adds to its appeal as a great destination for business expansion. EOR services help employers with employee benefits, payrolls, taxes and more, giving companies time to focus on their business goals.
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