Hire in Nigeria

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Last updated at November 15, 2022

Currency

Nigerian Naira (NGN)

Capital

Abuja

Time Zone

GMT+1

Key Country Facts

Introduction

Nigeria, officially the Federal Republic of Nigeria, is the most populous country in Africa and also has the largest economy. The country is a founding member of the African Union and a member of many international organizations, including the United Nations, the Commonwealth of Nations, the Economic Community of West African States and OPEC. Nigeria became independent in October 1960 and adopted a republican constitution.

Area

Nigeria is bordered to the north by Niger, to the east by Chad and Cameroon, to the south by the Gulf of Guinea of the Atlantic Ocean and to the west by Benin. It covers an area of 923,769 square kilometers and has a coastline spanning at least 853 kilometers.

Climate

Nigeria’s climate is tropical with variable rainy and dry seasons, depending on the location. It is hot and wet for most of the year in the southeast. However, it is mostly dry in the southwest and farther inland. The north and west hosts a savanna climate, with wet and dry seasons. A steppe climate with limited precipitation is found in Nigeria’s far north.

Culture

Nigeria has a rich and varied cultural heritage derived from its ethnic groups as well as Arabic and western European influences. The nation joins traditional culture with international urban sophistication. More than 250 ethnic tribes call present-day Nigeria home. The three largest and most dominant ethnic groups are the Hausa, Yoruba and Igbo. Nigeria’s ethnic groups have separate and independent histories.

Religion

Nigeria’s constitution ensures freedom of religion and the country has a religiously diverse society. Nigeria is divided approximately in half between Muslims, who mostly live in the north, and Christians, who mostly live in the south. There is also a tiny minority of adherents of traditional African religions and other religions.

Official Language

There are over 527 native languages spoken in Nigeria but the official language is English. Nigerian English and Nigerian Pidgin are spoken as a second language by 100 million people in Nigeria. The language is used for all formal communication in government, including the drafting of legislation as well as in the Nigerian judicial system.

Nigeria HR at a Glance

Employment Law

Employment law in Nigeria is generally employer friendly. Nevertheless, there are federal and local employment and labor laws that govern contracts, wages, hours, discrimination, terminations, layoffs and privacy. The Ministry of Labor and Productivity (the Ministry) is the main regulatory agency.

Nigerian Labor and Employment law is primarily based on the following statutes:

  • Labor Act of 2004
  • Trade Union Amended Act, 2005
  • Employees Compensation Act, 2010
  • Factories Act, 2004
  • Pensions Reform Act, 2004
  • Trade Disputes Act, 2004

There are two broad categories of employees in Nigeria, as defined in the Labor Act. ‘Workers’ are ‘generally employees who perform manual labor or clerical work’ and ‘non-workers’ are employees who perform administrative, executive, technical or professional functions. The Labor Act prescribes the minimum terms of employment and applies only to workers. Non-workers are subject to the terms of their employment contracts.

Employment Contract

It is mandatory for employers to provide a written contract to employees within three months of starting the employment relationship. This contract must include:

  • Name of the employer or group of employers if relevant
  • Name and address of the employee and the place and date of their engagement
  • Nature of employment
  • The date when the contract expire (for fixed-term contracts)
  • Notice period in event of employment termination (or, if employment is for a specified period, the termination date)
  • Remuneration and how it is calculated (including the payment mode and frequency)
  • Terms and conditions having to do with working hours, holidays and holiday pay
  • Provisions for sick pay
  • Other special conditions of the contract

The law in Nigeria does not specify the language in which a contract of employment must be concluded. However, employment contracts are written in English. If the employee does not understand English, the terms of the contract must be read and explained to the employee in a language they understand and consent to.

Contract Terms

Certain terms are implied in contracts of employment. For example, an employee has the following implied obligations:

  • To use reasonable care and skill
  • To serve the employer with fidelity and in good faith
  • Not to disclose confidential information
  • To be ready and willing to work

An employer has the following implied obligations:

  • To pay wages
  • To provide a safe workplace and safe work systems
  • To indemnify the employee against reasonable expenses as they perform their work
  • Not to disclose an employee’s sensitive information without their consent

Pre-Employment Checks

An employer can generally carry out background checks in relation to applicants (including criminal records, medical history, drug screening and credit checks) subject to certain restrictions. Background checks can be conducted by a third party on behalf of the employer.

Probation Period / Trial Period

There are no provisions for probationary periods under the Labor Act but such periods can be stipulated under the employment contract.

Working Hours

The working week in Nigeria is Monday to Friday. The working day for commercial offices is usually eight hours and the general understanding is that full-time hours amount to 40 hours per week.

A worker who works six hours or more per day is entitled to one or more suitably spaced rest breaks of at least one hour in total.

Overtime

Section 13 of the Labour Act governs overtime. Hours which a worker is required to work in excess of the normal hours fixed by mutual agreement, or in a collective bargaining agreement, shall constitute overtime. The agreements should also state the rate of overtime compensation.

In practice, senior executives are usually not entitled to overtime payments.

Timesheets

Payroll reports must be kept for a statutory minimum period of six years.

Bonus

There is no statutory requirement for employers in Nigeria to pay a bonus. However, it is common in the private sector to reward employees with contractual or discretionary bonuses.

Termination

Employers are generally entitled to terminate a contract of employment anytime without stating reason or cause, provided the appropriate notice is given or that a salary in lieu of such notice is paid. However, it is advisable for the employer to state the reasons for terminating an employee contract, in accordance with international standards. 

For termination due to business reasons (e.g. redundancy), a worker is entitled to the following payments:

  • Agreed redundancy or severance payment
  • Accrued salary until effective termination date
  • Encashment of accrued, unutilized annual leave entitlement
  • Unpaid incentives or bonuses (if applicable)
  • Gratuity payments (if applicable)
  • Reimbursement of out-of-pocket expenses incurred by employee (if applicable)

In the event of a redundancy, the employer must inform the trade union/representatives the reasons for and the extent of the expected redundancy. They will be expected to apply the principle of ‘last in, first out’ in determining the employees affected by the process and negotiate redundancy payments.

For non-workers, there is no statutory obligation for redundancy payments. This is instead subject to the individual contracts of employment. 

For termination due to reasons specific to an employee, the entitlement to compensation is subject to the provisions of the contract of employment. This typically includes accrued contractual payments (e.g. salary in lieu of notice if the employer chooses not to give notice), accrued salary and encashment of unutilized annual leave.

If the termination is due to misconduct, the employer must offer the employee an opportunity to defend himself or herself prior to dismissal. 

When an employee is no longer employed by a company, the tax authority must be advised accordingly.

Notice Period

Employees must be given notice of termination or a payment in lieu of notice.

The notice period are as follows:

  • One day – for length of service up to three months
  • One week – for length of service up to two years
  • Two weeks – for length of service up to five years
  • One month – for length of service greater than five years

Both the employer and the employee may agree to longer notice periods in a contract of employment. For non-workers, the notice period is determined by the terms of the employment contract.

Redundancy / Severance Pay

There is no general statutory severance pay in Nigeria but it can be regulated under the employment contract and sectoral collective agreements. This payment is usually calculated based on the worker’s length of service and last salary.

Post-Termination Restraints / Restrictive Covenants

Restrictive covenants are governed by the individual employment contract. Restrictions against trade for 12 months or less are usually enforceable in practice. Anything over one year will most likely be deemed unfair and unenforceable by the courts.

The employer is also not required to pay remuneration during the period of post-employment restrictions.

Fixed-Term Contracts

There is no limit to the duration of a fixed-term contract in Nigeria. However, the duration should be stated in the employment contract. If the employee continues to provide services to the employer after the contract expires, it will be deemed that a new fixed-term contract has started or that the employee has become a permanent employee.

Fixed-term employees enjoy employment rights and benefits in the same way as permanent employees.

Tax and Social Security

Personal Income Tax

Nigeria applies a Pay-As-You-Earn (PAYE) system to calculate the personal income tax of employees. It is called PAYE tax. This tax rate progresses from 7% to 24% of taxable income. Non-residents pay the same tax rates as residents.

Annual Income (NGN) Tax Rate %
First 300,000 7.0
Next 300,000 11.0
Next 500,000 15.0
Next 500,000 19.0
Next 1,600,000 21.0
Above 3,200,000 24.0

Social Security

Social security contributions in Nigeria cover benefits for retirement, disability, sickness and maternity. Employees contribute a minimum of 5% of their salary, while employers must contribute around 10% to the various benefit schemes.

The contributions payable in respect of each month are due on the last day of the month concerned.

The employer must register with the following statutory authorities:

  • Federal Inland Revenue Service (FIRS)
  • Lagos State Internal Revenue Service (LIRS) (if operations will predominantly be in Lagos State)
  • National Pension Commission (PenCom)
  • Nigeria Social Insurance Trust Fund (NSITF)
  • National Housing Fund (NHF)
  • Industrial Trading Fund (ITF)*
Social Security Contributions  Employer Rate (%) Employee Rate (%)
PenCom (Pension Contribution Scheme) 10.0 8.0
National Housing Fund (NHF) 2.5% of monthly basic salary
Industrial Training Fund (ITF)* 1.0% (of total payroll cost)
National Health Insurance Scheme (NHIS) 10.0% (of consolidated salary)  5.0% of consolidated salary
Nigeria Social Insurance Trust Fund (NSITF)  1.0% (of total salary)
Life Insurance Varies depending on annual salary, gender, age

*this is required only when employer has at least five employees and/or if its annual turnover is ~N50 million

Other coverage employer needs to provide include:

Group life insurance policy – It is mandatory for employers to procure (at its own expense) a group life insurance policy for each employee. 

Medical insurance – An employer with 10 or more employees is advised to pay contributions under the National Health Insurance Scheme. This is not mandatory but is suggested. 

The above rates serve as a broad guideline. Actual rates charged by GoGlobal will differ.

Employees

Salary Payment

Payment of salaries should be at least monthly but it is acceptable for it to be in shorter intervals (bi-weekly or weekly).

Payslip

The employer must provide the employee with a payslip for each pay cycle. These can be provided online.

Annual Leave

Every employee is entitled to paid annual leave of a minimum of six working days after 12 continuous months of service. For employees not covered by the Labor Act, there is no statutory provision on annual leave. However, 15 to 20 working days per 12 months of continuous service is the norm.

Sick Leave

An employee is entitled to 12 paid days of sick leave in any calendar year. The sickness must be certified by a registered medical practitioner.

The Employees Compensation Act outlines provision for the payment of compensation to employees who suffer from work-related injuries or illnesses.

Maternity & Parental Leave

Maternity Leave

A pregnant employee is entitled to 12 weeks’ maternity leave.

Pregnant employees are entitled to at least 50% of their normal wages, provided that they have been employed for at least six months.

Nursing mothers are allowed half an hour twice a day to attend to their babies. A surrogate mother may also be entitled to maternity leave.

Paternity Leave

The Labor Act does not contain provisions on paternity leave. However, in Lagos State, civil servants have a right to ten days’ paternity leave within the first two months following the birth of the baby.

Other Leave

There is no statutory entitlement to parental leave or leave to care for sick family members. For employees outside the scope of the Labor Act, the practice is that such employees are entitled to bereavement/compassionate leave ranging from one to two weeks. The employer is free to set its own policy. 

Public Holidays

There are about 14 public holidays per year in Nigeria.

Benefits to the Employee in Nigeria

Statutory Benefits

Pension

The law in Nigeria provides for both full pension as well as early pension. The qualifying condition for old age pension is reaching the age of 50 years with at least 20 years of contributions.

Dependents’/Survivors’ Benefit

The surviving family members are entitled to a survivors’ pension if the deceased person received or was entitled to receive an old age or disability pension.

Invalidity Benefit

Invalidity benefit is based on the insured individual’s contributions plus accrued interest. The worker’s disability must be reassessed every two years by a qualified doctor. 

Transportation

Employers must provide transportation for employees in situations where they have to travel over 16 kilometers.

Visas and Foreign Workers

General Information

The Federal Ministry of the Interior Admission approves the permits required by foreigners to work in Nigeria. Employers must seek the consent of the Ministry before employing foreign workers. They need to apply for an ‘expatriate quota,’ which allows a company to employ foreign nationals in specifically approved job designations. This is renewable annually.

Employers must show there are no suitably qualified Nigerian employees for the positions to be occupied by expatriates. If approval is granted, Nigerians are expected to be trained to fill the positions over time. These provisions do not apply to the employment of Nigerian nationals nor nationals of member states of the Economic Community of West African States (ECOWAS).

Any foreign national intending to perform work in Nigeria must obtain valid working and residence permits. These include the Combined Expatriate Residence Permit and Aliens Card. These are usually applied for by the company looking to employ the foreigner.

There are two types of visas which can be granted in Nigeria, depending on the length of stay. For short-term assignments, the employer must file an application and receive a temporary work permit. This allows the employee to perform specific tasks. The temporary work permit is a single-entry visa and it expires after three months. There are no quotas on short-term visas. Foreign nationals who meet the conditions for grant of a visa can apply for as many short-term visas as required.

For long-term assignments, the employer should apply for a “subject-to-regularization” (STR) visa (in cases where the expatriate quota is required). The expatriate quota states the positions in the company that will be occupied by expatriate staff. Upon arriving in Nigeria, the employee must validate his or her visa by applying for a work and residence permit.

Public Holidays in 2022

S.No Occasion Date
1 New Year’s Day January 3rd
2 Good Friday April 15th
3 Easter Monday April 18th
4 Labour Day May 2nd
5 Id el Fitri May 2nd
6 Id el Fitri Holiday May 3rd
7 International Children’s Day May 27th
8 Democracy Day June 13th
9 Id el Kabir July 11th
10 Id el Kabir Holiday July 12th
11 Independent Holiday October 1st – 3rd
12 Id el Maulud October 10th
13 Christmas Day December 27th
14 Boxing Day December 28th

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