With low labour costs and English being the official language, Nigeria sure is an attractive option for international companies searching for new hires to join the ranks of their remote teams. What’s more, Nigeria is one of the fastest growing economies in Africa which makes it the perfect gateway to explore business opportunities in the African market.
It is legally required to draft a written employment contract when hiring an employee who falls under the regulations of Nigeria’s Labour Act which includes workers performing manual labour as well as those with clerical duties. The contract should provide at least the following information:
- Identification of both parties
- Date of commencement (and employment duration for temporary contracts)
- Type of employment and description of the role as well as duties and responsibilities
- Salary and additional compensation as well as period of payment
- Working hours and overtime regulations
- Total number of holidays
- Notice periods for employment termination
Both permanent and fixed-term contracts are possible.
As there are no rules concerning the length of trial periods, employers and employees are free to define a probation period as they wish. Probationary periods between three and six months are common.
Working Hours and Breaks
Although there is no legal limit on working hours, a standard working week in Nigeria comprises 40 hours. It is, however, mandatory to give employees at least one proper rest day per week as well as a one-hour break during shifts that are longer than six hours.
There is no legislation when it comes to overtime work either. Therefore, employers and employees should agree on a reasonable limit for overtime work as well as on appropriate overtime pay. Both should be detailed in the employment contract. Depending on the industry, there might be a collective agreement in place which sets the standards for overtime work in the sector.
Employees in Nigeria can either be paid monthly, weekly or bi-weekly.
Currently (June 2021), Nigeria’s national minimum wage is set at NGN 30,000 per month.
Paid sick leave is limited to 12 days per year.
Despite there being no legal obligation to do so, many companies in Nigeria offer their employees performance-based or annual bonuses.
Taxes and Social Security Contribution
Employees and employers in Nigeria are subject to the following tax and social security contribution rates (as of 2021):
30% corporate tax rate (for companies with a turnover of more than NGN 100 million)
7.5% VAT (standard rate)
Individual income tax rates range from
7% to 24% *
11% of employee salary, of which:
10% pension (only companies with more than 15 employees)
1% payroll contribution
10.5% of employee salary, of which:
2.5% National Housing Fund (NHF) (only on income exceeding NGN 3,000 per year)
* Individual income is taxed progressively based on the following tax brackets (figures show annual income):
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%
After having completed their first year of service, employees are entitled to at least six days of paid annual leave. In addition, there are eleven public holidays (including two celebrations stretching over two days) on which employees receive a paid day off.
Maternity Leave and Paternity Leave
Female employees may take twelve weeks of paid maternity leave which can start up to six weeks before the intended date of birth. The pay rate during maternity leave is 50% of the employee’s usual wages. After maternity leave, mothers are allowed to take two 30-minute breaks per day in order to nurse their child.
There is no legal entitlement to paternity leave but some regions have introduced a paternity leave allowance.
Nigerian labour law does not provide for any parental leave.
Additional Leaves and Benefits
Additional employee benefits granted by many companies include additional pension plans, private health or life insurance.
Similar to the U.S., Nigerian law considers employment to be ‘at will’ which means that both employee and employer may terminate the employment relationship at any given moment without having to indicate a cause. However, employers have to respect the following notice periods:
- up to 3 months of service: 1 day
- up to 2 years of service: 1 week
- up to 5 years of service: 2 weeks
- more than 5 years of service: 1 month
Pay in lieu of notice is possible. No notice must be given if the employee is dismissed for a just cause such as gross misconduct or criminal offence. There is no statutory requirement to provide severance pay for dismissed employees but many companies do so anyway.
Hiring in Nigeria?
Not sure if you should start with a contractor or go ahead and hire a full-time teammate in Nigeria? The Lano platform makes it easy to go from freelance to full-time employee. Get expert guidance from the Lano team to compare your options and keep growing.