Employer of Record in Nigeria

Employment Laws and Regulations in Nigeria

Employment Contracts

Nigerian employment law requires a written contract for any engagement lasting more than three months under the Labour Act (Cap L1). The contract must be in English and include all mandatory terms: job title, basic salary and allowances, workplace location, working hours, leave entitlements, duration (fixed-term with end date or indefinite), probation period if applicable, and termination conditions. The employer must provide a signed copy to the employee within two weeks of hiring.

Employers can offer fixed-term contracts (defined end date, renewable by agreement) or indefinite-duration contracts (ongoing until termination with notice). Both must specify the probation period, typically 3–6 months, during which either party may terminate with shorter notice.

Working Hours and Overtime

Nigeria’s standard working week is 40 hours across five days, with an eight-hour daily cap, governed by Section 13 of the Labour Act. Employees are entitled to at least one rest day per seven-day period (typically Saturday or Sunday), provided as 24 consecutive hours with paid leave compensation if reduced. Hours worked beyond the standard constitute overtime and are compensated by contract, collective bargaining agreement, or industrial wages board order; the Labour Act does not prescribe rates. Common market practice uses 1.25x to 1.5x the hourly rate for weekday overtime and 1.5x to 2x for rest day or public holiday work.

Overtime rates are contractual, not statutory. Employer and employee may negotiate rates within market practice. Managers and salaried professionals are often exempt from overtime by contract, receiving fixed compensation packages instead.

Minimum Wage

Nigeria’s national minimum wage is ₦70,000 per month, effective 1 May 2024, per the National Minimum Wage (Amendment) Act 2024 signed July 2024. The minimum wage applies uniformly to all private and public sector workers earning less than this threshold. It is subject to review every two years by a tripartite committee (government, employers, and trade unions). The current rate is set to expire in 2027. Certain exemptions apply: workers employed on a part-time basis, those paid by commission or piece rate, employers with fewer than 25 employees, seasonal workers, and workers in vessels or aircraft. See our minimum wage in Nigeria guide for sector-specific guidance and compliance notes.

Probation Period

The Labour Act sets no statutory maximum probation period. Industry practice typically uses 3–6 months. The employment contract must state the probation length and conditions for completion. During probation, employees are entitled to statutory leave and benefits, but may receive shorter notice periods (often one day or one week instead of the full statutory period) at termination. Upon completion, workers move to permanent status with all leave and severance entitlements. Our Nigeria probation period guide covers drafting, notice during probation, and common market practice in more depth.

Leave Entitlements

Nigeria’s Labour Act mandates paid leave to protect employee rest and well-being. These entitlements are enforceable across all sectors. For comprehensive guidance on leave administration, see our employee benefits in Nigeria resource.

Annual Leave

Employees receive a minimum of 6 working days of paid annual leave after 12 months continuous service under Section 18 of the Labour Act. Young workers (under 16) and apprentices receive a minimum 12 working days. Leave is paid at the ordinary rate (excluding overtime). Leave may carry forward by agreement, though excessive carryover is uncommon. Employees may take leave in portions with employer agreement.

Sick Leave

The Labour Act provides 12 working days of paid sick leave per calendar year without requiring a medical certificate for the first three days. After three consecutive days absent, a registered medical practitioner’s certificate is mandatory. The first 7 days are paid at full rate; the subsequent 5 days at 50% of wages (in practice, many employers pay full sick leave). Sick leave is separate from annual leave and does not accrue unused days into the following year.

Maternity Leave

Female employees receive a minimum 12 weeks of maternity leave per Section 54 of the Labour Act, at not less than 50% of wages if the employee has been continuously employed for six months or more. In practice, many employers pay full maternity salary. Leave comprises six weeks before confinement and six weeks after. The mother is entitled to one hour of paid nursing time daily until the child reaches 12 months, counted as regular working hours. Dismissal for pregnancy or childbirth is prohibited.

Paternity Leave

Nigeria’s Labour Act does not mandate paternity leave for private sector employees. However, the Federal Government approved 14 working days of paternity leave for federal civil servants in November 2022, effective for up to four children per employee and not more than once every two years. Private sector paternity leave depends on the employment contract or company policy. Some employers voluntarily provide 3–7 days.

Other Statutory Leave

Bereavement leave, marriage leave, study leave, and other special leave are not mandated by the Labour Act and depend on individual contract or company policy. Religious holiday leave is not separately required beyond the national public holiday calendar, though employers may accommodate religious observance by contract.

Here is a summary of Nigeria’s statutory leave entitlements under the Labour Act (Cap L1). Annual leave accrues after 12 months of service, while sick and maternity leave are available from the first day of employment.

Statutory Employee Benefits

Beyond leave entitlements, Nigerian law mandates several non-wage benefits that employers must provide:

Nigeria’s statutory benefits framework layers several mandatory schemes on top of base salary. Under the Pension Reform Act 2014, all employees join a three-tier contributory pension scheme administered by the National Pension Commission (PenCom), funded by 10% employer and 8% employee contributions on monthly emoluments with a maximum insurable cap set annually by PenCom. The National Health Insurance Authority Act 2022 requires employers with five or more employees to register workers with NHIA, with a combined 15% contribution (10% employer, 5% employee) on basic salary, though many employers pay the full premium to shield staff from deductions. The Employee Compensation Act mandates a 1% employer contribution to the Nigeria Social Insurance Trust Fund (NSITF), covering workplace injury, occupational disease, and death benefits. Employers with five or more staff also pay a 1% annual Industrial Training Fund (ITF) levy on total payroll to support workforce training. Following the 2025 tax reforms, National Housing Fund contributions are no longer mandatory for private-sector employees, though public-sector workers and self-employed individuals earning the minimum wage or above must still contribute 2.5% of gross monthly salary. Nigeria does not mandate housing, transport, or meal allowances in the private sector, though these are commonly added to compensation packages by contract.

Recent Regulatory Updates (2026)

Nigeria underwent a major tax reform in June 2025 when the National Assembly passed four critical pieces of legislation: the Nigeria Tax Act 2025, the Nigeria Tax Administration Act 2025, the Nigeria Revenue Service Act 2025, and the Joint Revenue Board Act 2025. These laws became effective on 1 January 2026.

The Nigeria Tax Act 2025 introduced a completely revised Personal Income Tax structure with new brackets and the first significant increase to the tax-free threshold in over a decade. The new tax-free threshold is now ₦800,000 annually (previously ₦300,000), with progressive brackets reaching 25% at the top rate for annual income above ₦50 million. The Consolidated Relief Allowance (CRA) was abolished in favor of itemized deductions including 20% rent relief (capped at ₦500,000), pension contributions (8% of gross), National Housing Fund (2.5%), and life assurance premiums (up to ₦100,000). These changes take effect from January 2026 and represent the most comprehensive overhaul of Nigeria’s personal taxation in the last decade.

The minimum wage remained at ₦70,000 per month (effective May 2024 and set for review in 2027). The National Health Insurance Authority continues mandatory coverage for organizations with 5+ employees. No major changes to the Labour Act occurred in 2025, though employment practices continue evolving through case law and industry standards.

Work Permits and Visas in Nigeria

Work Permit Requirements

Who Needs a Work Permit

All non-Nigerian nationals intending to work in Nigeria require a work permit and the Combined Expatriate Residence Permit and Aliens Card (CERPAC) from the Nigeria Immigration Service. Regional treaties (such as ECOWAS agreements for West African nationals) may provide limited exemptions for short-term visits, but employment typically requires a permit regardless of nationality.

Eligibility and Required Documents

The employer (or the EOR on the employer’s behalf) submits the work permit application to the Nigeria Immigration Service. Required documents include: valid passport, signed employment contract, police clearance or criminal background check, medical examination results, educational or professional qualifications, proof of employment (job offer letter), and a Non-Citizen ID Card application. The applicant must also undergo biometric registration at a designated NIS office.

Processing Time and Validity

Work permits typically process in 4–8 weeks from submission to approval. Once granted, CERPAC is valid for 12 months. Employees may begin work while processing continues under the employer’s sponsorship, but international travel requires the valid permit card.

Renewal Process

Permits renew annually. Employers submit renewal applications to the Nigeria Immigration Service 4–6 weeks before expiry, with an updated employment contract and current payroll records. Work may continue during renewal. Failure to renew results in fines and deportation risk.

Common Visa Types for Foreign Workers

Nigeria offers several visa pathways for foreign workers. The most common routes for employment are the Subject-to-Regularization (STR) visa and the Temporary Work Permit (TWP), which allow entry; the worker then applies for CERPAC upon arrival. Nigeria does not currently offer a dedicated digital nomad or freelance visa. Immigration rules may change, so confirm current requirements with the Nigeria Immigration Service.

Other visa types not listed above do not permit employment:

Two common visa categories do not support employment in Nigeria. Tourist visas are valid for 30–90 days and prohibit paid work; violations result in cancellation and deportation risk. Student visas restrict activities to on-campus engagement, and any external employment requires a separate work permit.

How an EOR Handles Work Permits

Your EOR acts as the official sponsoring employer for work permit applications. The EOR collects all required documentation (passport copies, medical exam results, police clearance, employment contract, qualifications), prepares the complete application package, and submits it to the Nigeria Immigration Service. The EOR also tracks application status, responds to information requests, and manages the approval process until CERPAC is issued. This responsibility adds 4–8 weeks to onboarding for non-Nigerian staff but ensures immigration compliance. Your EOR handles all interaction with Nigeria Immigration Service, so your company does not need to navigate the system directly.

Payroll, Taxes, and Social Security in Nigeria

For guidance on Nigeria payroll outsourcing, local tax filing, and contribution remittance, see our Nigeria payroll outsourcing services, which covers FIRS returns, state IRS PAYE remittance, and PenCom pension filing cycles.

Employer Contributions

Employers in Nigeria are required to contribute to several mandatory social security and training funds, calculated as percentages of employee salaries. These contributions are separate from the employee’s gross salary and represent employer-borne costs. Contributions are calculated on monthly emoluments as defined in the employment contract (basic salary plus statutory allowances).

Employee Contributions

Employees contribute to the pension system and health insurance through payroll deductions. These are withheld before income tax is calculated, reducing the employee’s taxable income. Contributions are remitted to the respective authorities on the employee’s behalf by the employer.

Income Tax

Nigeria uses a progressive monthly Personal Income Tax (PIT) system under the Nigeria Tax Act 2025, effective 1 January 2026. Tax is calculated on chargeable income, which is gross monthly salary minus the 8% pension contribution and 5% NHIA health insurance deduction. The new brackets introduced in January 2026 feature a ₦800,000 annual tax-free threshold (roughly ₦66,667 monthly), significantly higher than the previous ₦300,000. Non-residents pay a flat 25% on Nigeria-source employment income.

Payroll Cycle

Payroll runs monthly with bank transfers due by the last working day of the month. All payments are in Nigerian Naira (NGN). Employers must remit Personal Income Tax to the Nigeria Revenue Service by the 21st of the following month and submit pension contributions to the PFA by the 23rd. NHIA and NSITF contributions have similar timelines (by the 15th–16th). Payslips must show gross salary, pension and health insurance deductions, PIT withheld, and net pay. Using an EOR means the provider handles all payroll processing, tax remittance, and statutory reporting on your behalf.

13th Month Salary and Bonus Pay

Nigeria does not require a 13th month salary or year-end bonus by law. Some employers offer these voluntarily as part of compensation, discretionary bonuses, or through collective bargaining agreements, but it is entirely optional. If provided, the 13th month salary or bonus is subject to regular payroll withholding (PIT, pension, and NHIA contributions) like any monthly payment and receives no special tax treatment under the Nigeria Tax Act 2025.

Cost of Hiring Through an EOR in Nigeria

EOR Service Fees

EOR service fees in Nigeria typically range from $300 to $600 per employee per month, depending on your provider and the level of support required. This flat fee includes employment contracts, payroll processing, tax withholding and remittance, pension and health insurance administration, statutory reporting, and ongoing compliance support. There are no upfront setup costs.

Total Employment Cost Breakdown

Your total hiring cost includes the employee’s gross salary, all mandatory employer contributions, and the EOR monthly fee. Here is an example for a ₦750,000 monthly gross salary (approximately $500 USD at the April 2026 exchange rate of ₦1,500 = $1).

Ready to hire in Nigeria? We handle employment contracts, payroll, tax withholding, and compliance so you can focus on business growth. Your team starts within days, not months.

Benefits of Using an EOR in Nigeria

An EOR simplifies Nigeria hiring by removing legal, administrative, and financial barriers. You hand off compliance to a specialist, allowing you to scale your Nigeria team in weeks instead of months while maintaining direct management of daily operations.

Companies that use an EOR in Nigeria gain seven practical advantages. Speed to market comes first: employees can be onboarded in 1–2 weeks without company registration, tax identification numbers, or local partnership negotiations, so operations begin immediately. Full regulatory compliance is built in, with the EOR handling the Labour Act (Cap L1), Pension Reform Act 2014, NHIA, Nigeria Revenue Service, and Nigeria Immigration Service obligations. Cost efficiency is meaningful too: an EOR costs $300–$600 per employee per month versus ₦500,000–₦1,000,000+ per year to operate a local subsidiary, with no office lease, corporate secretary, or local directors required. EORs provide local HR expertise, including knowledge of Nigerian labour customs, public holidays, and National Industrial Court precedent, reducing the risk of costly compliance errors. Scalability without commitment lets you add or remove employees as needs change without unwinding a legal entity. Risk mitigation covers statutory and contractual exposure, with the EOR managing any National Industrial Court claims on your behalf. Finally, a professional employee experience – proper payslips, NHIA coverage, pension statements, leave tracking, and statutory protections – builds trust, reduces turnover, and strengthens your employer brand in Nigeria.

Contact Remote People to accelerate your Nigeria hiring and help you build a compliant, efficient team.

Termination and Offboarding in Nigeria

Notice Periods

Nigeria’s Labour Act (Cap L1) sets statutory notice periods based on tenure under Section 11. Either party may terminate by giving written notice on the expiration date; notice may be paid in lieu by mutual agreement if the employee receives full salary compensation. The statutory minimum cannot be shortened unilaterally, though parties may agree to longer periods in the employment contract.

Just-cause terminations (theft, violence, serious misconduct, breach of contract) do not require statutory notice if documented and the employee is given a fair opportunity to respond. Mutual agreement in writing can also shorten or waive notice if both parties consent. During notice, employees remain entitled to full wages, benefits, and leave accrual.

Severance Pay

Nigeria’s Labour Act does not prescribe a statutory severance pay formula. Section 20 requires employers to “use best endeavors to negotiate redundancy payments” for dismissed workers, but no fixed formula exists. Severance is determined by employment contract, collective bargaining agreement, company policy, or negotiation at termination. If employer and employee cannot agree, the National Industrial Court may award compensation for unfair dismissal, which can exceed negotiated amounts.

Calculation Method

Severance is negotiated based on years of service, reason for termination (redundancy, restructuring, or performance), final gross salary, and any applicable collective bargaining agreement. A common formula is the last monthly gross salary multiplied by an agreed number of months per year of service. For example, an employee with 5 years earning ₦500,000 monthly might receive 1 month per year of service, totaling ₦2,500,000 (5 months’ salary). However, no statutory formula binds this calculation.

Caps and Exceptions

Nigeria’s labour law sets no statutory severance cap. Probationary staff, casual workers, and fixed-term contractors whose terms end without renewal have no severance entitlement unless the contract provides otherwise. If a dispute arises, the National Industrial Court can order back wages, reinstatement, or enhanced severance beyond negotiated amounts. Your EOR ensures all termination payments comply with local standards and are properly documented.

Grounds for Termination

Employers can terminate on two grounds: just cause (misconduct, incompetence, breach of contract) and without cause (redundancy, business restructuring). Just-cause terminations require documented evidence and a fair hearing per the Labour Act. Section 11 protects workers from termination based on union membership, pregnancy, political opinion, religion, gender, race, or disability. Discriminatory terminations lead to damages claims and reinstatement orders from the National Industrial Court.

EOR vs. Other Hiring Models in Nigeria

EOR vs. Setting Up a Local Entity

An EOR handles legal employment and compliance without local registration. A subsidiary requires months of administrative work, local directors, corporate accounts, and ongoing overhead. Your choice depends on team size, timeline, and budget. Here’s a detailed comparison:

For 1–15 person teams or market entry, an EOR is much faster and cheaper. Setup is limited to employment agreements and pension registration, completed within days. No upfront costs, no local directors needed, and no company dissolution costs if plans change. A local entity makes sense at 15+ employees or when pursuing government contracts requiring Nigerian registration. You gain more HR control and brand presence but face ongoing compliance work and high exit costs.

Many companies start with an EOR to test the Nigeria market, then move to a local subsidiary as the team grows. This phased approach reduces risk and maintains flexibility.

EOR vs. Hiring Independent Contractors

An EOR provides full-time employment with benefits and legal protections. Contractors are self-employed and handle their own taxes and insurance. Misclassification risk is significant in Nigeria, with serious penalties.

Misclassification carries meaningful legal exposure in Nigeria. If the tax authority or National Industrial Court determines a contractor should have been an employee based on exclusivity, control, duration, or integration into the business, you face back Personal Income Tax, pension contributions, NHIA premiums, and substantial penalties. Use contractors only for defined projects with clear deliverables, fixed end dates, and genuine independence.

Our contractor solution simplifies engagement while maintaining proper legal classification and compliance. For ongoing roles needing team integration and direct management, an EOR full-time hire is the compliant path.

EOR vs. PEO (Professional Employer Organization)

A PEO shares employment responsibilities with you in a co-employment model. An EOR is the sole legal employer. This structural difference affects liability, setup, and control.

Nigeria does not have a formal PEO framework like the United States. Most providers operating in Nigeria function as EORs or payroll processors, not co-employers. An EOR is the preferred model for remote hiring abroad because it eliminates local entity setup, clarifies liability, and gives you operational control under Nigeria’s law. PEO arrangements only make sense if you already operate an office and have a local registered entity.

Public Holidays in Nigeria

Nigeria observes 13 federal public holidays in 2026. Employers must grant these as paid days off under the Labour Act. Employees are paid their ordinary rate even if not working. Work on a public holiday results in premium pay (typically 1.5x to 2x the hourly rate) or a compensatory rest day. Your EOR accounts for holidays automatically in payroll and absence tracking.

How to Get Started with an EOR in Nigeria

Hiring your first Nigeria employee through an EOR is straightforward and takes one to two weeks:

• First, define the role, job title, and salary for your Nigeria hire. Ensure the monthly gross meets or exceeds Nigeria’s minimum wage of ₦70,000. Prepare a clear job description and compensation package in NGN.
• Second, engage an employer of record provider and provide candidate information, including name, address, professional background, start date, and salary. The EOR prepares an employment agreement compliant with the Labour Act and collects required documentation.
• Third, review and sign the employment agreement. The contract outlines salary, allowances, benefits, notice periods, grounds for termination, leave entitlements, and compliance with Nigerian law. The candidate must also sign and retain a copy.
• Fourth, coordinate the first payroll. Provide the EOR with banking details, salary amount, and any onboarding bonus or signing incentive. The EOR registers the employee with a Pension Fund Administrator, applies for NHIA health insurance, and begins payroll processing in NGN.
• Fifth, monitor ongoing compliance through the EOR’s reporting dashboard. Communicate any salary changes, termination, or leave requests to the EOR. The provider delivers monthly payslips, statutory reports, and ongoing HR support.

Contact us today to start your Nigeria team. We handle contracts, payroll, taxes, and compliance so you can focus on business growth. Your team starts within days.

Where companies hiring in Nigeria expand next

Companies building West African operations commonly expand across the ECOWAS bloc and neighboring Francophone and Anglophone markets. Many companies add Ivory Coast first, drawing on the regional West African talent footprint. A team in Cameroon follows as overlapping West African workforce dynamics, while operations in Mali offers shared West African labor and language overlap. Ghana is often the fourth step, valued for aligned West African hiring norms.