Employer of Record Guide in Nigeria
Nigeria's tech talent pool is booming, but navigating local employment laws and compliance requirements can feel overwhelming. Our comprehensive guide breaks down everything you need to know to hire confidently and compliantly in Africa's largest economy.
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With over 200 million people and a rapidly growing digital economy, Nigeria offers incredible opportunities for global teams. From Lagos' thriving fintech scene to emerging talent hubs across the country, here's what makes Nigeria a strategic hiring destination.
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Your EOR guide in Nigeria
Understanding Nigeria's employment framework is crucial for successful hiring—from recent minimum wage changes to complex tax structures evolving in 2026. This guide covers the essential compliance requirements, payroll obligations, and employment practices you need to build your Nigerian team.
Minimum Wage
Nigeria's minimum wage is ₦70,000 per month, effective July 2024, representing a significant increase from the previous ₦30,000 rate.
Key Requirements:
- Applies to employers with 25 or more employees
- Businesses with fewer than 25 employees are exempt
- Part-time and commission-based workers are also exempt
- Implementation varies across Nigerian states
Note: Writer should verify current implementation status across all 36 states, as enforcement remains uneven as of early 2025.
Payroll Cycle
Nigerian labour law requires wages to be paid at intervals not exceeding one month. Common practices include:
- Monthly: Most prevalent for formal sector employees
- Bi-weekly: Permitted and used by some employers
- Weekly: Allowed but less common
Individual Income Tax
Nigeria's tax structure is undergoing significant changes.
Current Tax Structure (2025):
- Up to ₦300,000: 7%
- Next ₦300,000: 11%
- Next ₦500,000: 15%
- Next ₦500,000: 19%
- Next ₦1,600,000: 21%
- Above ₦3,200,000: 24%
New Tax Structure (Effective January 1, 2026):
- First ₦800,000: 0% (Tax-free)
- Next ₦2,200,000: 15%
- Next ₦9,000,000: 18%
- Next ₦13,000,000: 21%
- Next ₦25,000,000: 23%
- Above ₦50,000,000: 25%
Tax Residency Criteria
Current Criteria (2025): 183 days physical presence in Nigeria within 12 months
Expanded Criteria (Effective January 2026):
- Domicile in Nigeria
- Permanent home in Nigeria
- Substantial economic ties to Nigeria
- Diplomatic service
Employer Payroll Contributions
Employers must contribute to several mandatory schemes, totalling approximately 22-25% of employee salaries:
| Contribution | Employer Rate | Employee Rate | Purpose |
|---|---|---|---|
| Contributory Pension Scheme | 10% | 8% | Retirement savings |
| NSITF (Employee Compensation) | 1% | 0% | Work injury compensation |
| ITF (Industrial Training Fund) | 1% of annual payroll | 0% | Skills development |
| NHIA (Health Insurance) | 10% of basic salary | 5% | Healthcare coverage |
| NHF (Housing Fund) | 0% | 2.5% | Housing development |
Note: A new Development Levy of 4% on assessable profits may also apply.
Working Hours
Standard Schedule:
- 8 hours per day
- 40-48 hours per week
- Minimum 1-hour break for employees working 6+ hours daily
- 24 consecutive hours of weekly rest mandatory
Exemptions: Managerial and executive roles typically have flexible arrangements outside standard hour limits.
Overtime Pay
Overtime compensation is required for work beyond standard contractual hours:
- Regular overtime: 1.25× normal hourly rate
- Rest days/public holidays: 1.5× normal hourly rate
- No statutory maximum: Unlike some countries, Nigeria doesn't cap overtime hours
Bonus Payments
While not legally mandated, bonus payments are common practice:
- Performance-based bonuses are standard
- 13th-month bonuses are frequently provided
- All accrued bonuses must be included in final termination payments
Full-Time vs Part-Time Classification
- Full-time: 40-48 hours per week with full benefits
- Part-time: Less than 30-35 hours per week
- Benefits: Part-time permanent staff receive pro-rata benefits
Vacation Leave
Minimum Entitlement:
- 6 working days after 12 months of continuous service
- 12 working days for employees under 16 years old
- Full basic salary paid during leave
- Unused days must be paid out upon termination
Sick Leave
Employees are entitled to up to 12 working days of paid sick leave per calendar year:
- Full basic wage during sick leave
- Medical certificate required after two days of absence
- Long-term disability not covered under the Labour Act
Maternity Leave
Private Sector:
- 12 weeks minimum (6 weeks before birth, 6 weeks after)
- Minimum 50% of salary paid
- Requires 6 months of continuous employment
Public Sector:
- 16 weeks fully paid
- 100% of salary maintained
Parental Leave
Private Sector: No statutory paternity leave provision
Public Sector: 14 working days for federal civil servants
State Variations:
- Lagos: 10-14 days
- Enugu: 3 weeks
- Kogi: 14 days
Bereavement Leave
No statutory requirement exists in the private sector, but common practice includes:
- 3-10 days paid compassionate leave
- Varies by employer policy
- "Widowhood Leave Bill" currently under legislative consideration
Personal & Family Leave
No statutory provision for family responsibility leave. Most employers provide:
- 5-7 days annual casual/compassionate leave
- Covered under general personal leave policies
Summary
| Leave Type | Duration | Paid? | Funding |
|---|---|---|---|
| Vacation | 6-12 working days/year | Yes | Employer |
| Sick Leave | 12 working days/year | Yes | Employer |
| Maternity Leave (Private) | 12 weeks | 50% minimum | Employer |
| Maternity Leave (Public) | 16 weeks | 100% | Government |
| Paternity Leave (Private) | None | N/A | N/A |
| Paternity Leave (Public) | 14 working days | Yes | Government |
| Bereavement | 3-10 days (discretionary) | Usually | Employer |
Termination Types
Termination With Cause:
- Immediate dismissal for gross misconduct
- No notice or severance required
- Must be substantiated with evidence
Termination Without Cause:
- Requires valid reason (recent NICN rulings)
- Must follow proper procedures
- Notice and potential severance required
Constructive Dismissal:
- Employee forced to resign due to intolerable working conditions
- Treated as employer-initiated termination
Notice Period Requirements
Minimum statutory notice periods based on length of service:
| Length of Employment | Minimum Notice Period |
|---|---|
| Up to 3 months | 1 day |
| 3 months to 2 years | 1 week |
| 2 to 5 years | 2 weeks |
| 5+ years | 1 month |
Severance Pay
- General Rule: No statutory severance requirement except for redundancy
- Calculation: No single statutory formula; depends on employment contract terms
- Redundancy: Specific compensation may apply based on circumstances
Probationary Periods
- Standard Length: 3-6 months as specified in employment contract
- Employee Rights: Fair labour practices still apply during probation
- Termination: Valid reason required even during probation (NICN ruling)
Final Pay Requirements
Final payments must include:
- Salary for period worked
- Payment in lieu of notice
- Accrued unused annual leave
- Severance/redundancy payments (if applicable)
- Other earned entitlements (bonuses, allowances)
Anti-Discrimination & Retaliation Laws
Protected characteristics under Nigerian law include:
- Community, ethnic group, place of origin
- Sex, religion, political opinion
- HIV/AIDS status (2014 Act)
- Disability (2018 Act)
Termination based on these characteristics is prohibited and may result in legal action.
National Public Holidays 2025
Confirmed Holidays:
- New Year's Day: January 1
- Good Friday: April 18
- Easter Monday: April 21
- Workers' Day: May 1
- Democracy Day: June 12
- Independence Day: October 1
- Christmas Day: December 25
- Boxing Day: December 26
Islamic Holidays (Tentative Dates):
- Eid al-Fitr: March 30-31
- Eid al-Adha: June 6 & 9
- Eid-El-Maulud: September 5
Note: Islamic holiday dates depend on lunar calendar observations and may vary.
Holiday Pay Eligibility
- Full-time employees: Receive regular day's pay for public holidays
- Working on holidays: Double standard wage or paid day off in lieu
- Part-time employees: Pro-rata holiday pay based on hours worked
Regional Variations
Some states may observe additional local holidays. Employers should verify specific requirements in their operational states.
Required Documents for Employment
Employment Contract:
- Must be provided within 3 months for "workers" under the Labour Act
- Should include job title, duties, salary, working hours, leave entitlements
- Must comply with minimum statutory requirements
Government Forms:
- TIN (Tax Identification Number): Mandatory for all employees
- NYSC Certificate: Required for graduates in corporate/government roles
- Work Permits: Foreign nationals require proper work authorisation
Banking Information:
- Bank account details for salary payments
- Most employers use direct deposit systems
Language Requirements
- Official Language: English
- Working Language: English for business and administrative purposes
- Local Languages: May be beneficial but not typically required
Background Checks & References
Background checks are permitted under the Nigeria Data Protection Act 2023:
Permitted Checks:
- Identity verification
- Educational qualification verification
- Criminal record checks (where relevant to role)
- Employment history verification
Requirements:
- Explicit employee consent required
- Must be relevant to the position
- Data processing must comply with privacy regulations
Data Protection & Privacy
Governing Law: Nigeria Data Protection Act 2023
Employee Rights:
- Right to information about data processing
- Right to access personal data
- Right to correction of inaccurate data
Employer Obligations:
- Establish lawful basis for data processing
- Implement appropriate security measures
- Maintain confidentiality of employee data
IP Assignment & Confidentiality
Intellectual Property:
- Work-related IP generally belongs to employer
- Employment contracts should include clear IP assignment clauses
Non-Compete Clauses:
- Generally unenforceable unless "reasonable" in scope and duration
- Maximum 2 years may be permissible in specific circumstances
Probation Period Setup
- Standard probationary periods range from 3-6 months
- Must be clearly specified in employment contract
- Fair labour practices apply even during probation
- Valid reasons required for termination during probation
Onboarding Timeline (Sample)
| Step | Timeline |
|---|---|
| Job offer accepted | Day 0 |
| Employment contract preparation | Day 1-3 |
| Document collection (TIN, certificates) | Day 3-7 |
| Background checks completed | Day 5-10 |
| Payroll and benefits setup | Day 7-14 |
| First day of work | Day 14-21 |
What the EOR Handles
Borderless AI manages:
- Employment contract drafting and compliance
- Local tax registration and compliance
- Payroll processing and statutory contributions
- Benefits administration
- Regulatory compliance monitoring
- Local legal representation
Worker Classification: Employee vs Contractor
Nigerian courts consider several factors when determining worker classification:
Key Factors:
- Control: Level of employer control over work performance
- Integration: How integral the work is to the business
- Personal Service: Whether the individual must personally perform the work
- Tools/Equipment: Who provides necessary work tools
- Payment Structure: Regular salary vs project-based payments
Misclassification can result in penalties, back payments for benefits, and tax liabilities.
Unionisation & Collective Agreements
Right to Unionise: Protected by Nigerian law across all sectors
Strong Union Industries:
- Oil and gas
- Banking and finance
- Manufacturing
- Public sector
Collective Bargaining: Common in unionised sectors and can override individual employment terms where applicable.
Cultural Norms & DEI Expectations
Communication Style:
- Hierarchical structure with respect for authority
- Formal communication preferred in business settings
- Relationship-building important for business success
Work-Life Balance:
- Growing awareness and demand for better balance
- Traditional long working hours culture slowly changing
- Family obligations highly valued
Diversity & Inclusion:
- Increasing focus on formal DEI policies
- Nigeria's diverse ethnic and religious composition requires sensitivity
- Gender equality initiatives gaining momentum in corporate sector
Remote Work Considerations
Legal Framework: No comprehensive remote work legislation as of 2025
Employer Obligations:
- Clear employment contracts specifying remote work terms
- Health and safety guidance for home offices
- Equipment provision or reimbursement policies
- Regular communication and performance management systems
Tax Implications:
- Nigerian tax residents liable for worldwide income tax
- Proper documentation required for remote work arrangements
- Cross-border tax considerations for international remote workers
Practical Considerations:
- Internet connectivity and power supply challenges in some regions
- Time zone coordination for international teams
- Cultural adaptation to remote work practices still developing
Special Industry Considerations
Oil & Gas: Highly regulated with specific labour requirements and strong union presence
Banking & Finance: Subject to Central Bank of Nigeria regulations and compliance requirements
Technology: Growing sector with increasing demand for flexible work arrangements
Manufacturing: Often subject to collective bargaining agreements and specific safety regulations
Built-in benefits packages for Nigeria
When the world is your competition, it pays to incentivize new hires and existing alike. Borderless AI benefits packages typically inlucde:
Medical Insurance
Dental Insurance
Retirement Contribution
Life Insurance
Vision Insurance
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