Hire in Nigeria

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Last updated at June 16, 2022

Currency

Nigerian Naira (NGN)

Capital

Abuja

Time Zone

GMT+1

Key Country Facts

Introduction

Officially the Federal Republic of Nigeria, Nigeria is the most populous country and has the largest economy in Africa. Nigeria 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. The country became independent in 1963 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 km2 and has a coastline of at least 853km.

Climate

Nigeria has a tropical climate with variable rainy and dry seasons, depending on location. It is hot and wet most of the year in the southeast but dry in the southwest and farther inland. The north and west has a savanna climate, with marked wet and dry seasons, while a steppe climate with little precipitation is found in the far north.

Culture

Nigeria has a rich and varied cultural heritage derived from its ethnic groups, together with Arabic and western European influences. The country combines 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, and the ethnic groups have separate and independent histories.

Religion

Nigeria’s constitution ensures freedom of religion and it is a religiously diverse society, with Islam and Christianity being the most widely professed religions. Nigeria is divided roughly in half between Muslims, who live mostly in the north, and Christians, who live mostly in the south, with a tiny minority of adherents of traditional African religions and other religions.

Official Language

There are over 527 native languages spoken in Nigerian, 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 and is also the language used in the drafting of legislations 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 labour laws that govern contracts, wage and hour, discrimination, terminations, lay-offs and privacy. The Ministry of Labour and Productivity (the Ministry) is the main regulatory agency.

Nigerian Labour and Employment law is largely based on the following statutes:

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

There are 2 broad categories of employees in Nigeria, as defined in the Labour Act. ‘Workers’ are ‘generally employees who perform manual labour or clerical work’, and ‘Non-workers’ or employees who perform administrative, executive, technical or professional functions. The Labour 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 3 months of commencing the employment relationship, and this 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
  • For fixed term contracts, the date when the contract expires
  • Notice period in event of employment termination or, if employment is for a specified period, the termination date
  • Remuneration and how it is calculated, and the payment mode and frequency
  • Terms and conditions relating to working hours, holidays and holiday pay
  • Provisions for sick pay
  • Other special conditions of the contract

Nigerian employment law does not specify the language in which a contract of employment must be written. 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 into 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 in the performance of their employment
  • Not to disclose sensitive information regarding employees 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, 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 Labour Act but 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 8 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

There are no statutory provisions on overtime work limit and overtime pay. Overtime compensation depends on if it has been included by mutual agreement in the employment contract, a collective bargaining agreement or by an order of the industrial wages board.

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

Timesheets

Payroll reports must be kept for a statutory minimum period of 6 years.

Bonus

There is no statutory requirement to pay bonus, but 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, unutilised 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 reason of and extent of expected redundancy, 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 and is subject to the individual contracts of employment.

For termination due to reasons relating to 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 unutilised annual leave.

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

Once an employee leaves the employment of a company, the tax authority must be advised accordingly.

Notice Period

Employees must be given notice of termination, or salary in lieu of notice.

The notice period are as follows:

  • 1 day – for length of service up to 3 months
  • 1 week – for length of service up to 2 years
  • 2 weeks – for length of service up to 5 years
  • 1 month – for length of service >5 years

Both employer and employee may agree to longer notice periods in their contracts 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, but it can be regulated under the employment contract and sectoral collective agreements. It is usually calculated based on the worker’s length of service and last salary.

Post-Termination Restraints / Restrictive Covenants

These provisions are governed by the individual employment contract. Restrictive covenants for trade of 12 months or less are usually enforceable in practice, but anything over one year would most likely be deemed unfair and unenforceable by the courts.

The employer is also not obliged 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, but the duration should be stated in the employment contract. If the employee continues to provide services to the employer after the contract expires, it can be deemed that a new fixed-term contract has started or that the employee has become a permanent employee.

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

Tax and Social Security

Personal Income Tax

Brazilian Resident Individuals are tax on a progressive basis

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 8% of their salary, while employers must contribute around 10% to the various benefit schemes.

The contributions payable in respect of each month shall fall 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)*

*this is required only when employer has at least 5 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 employer to procure, at its own cost, 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 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

Employees must be provided with payslips for each pay-cycle (these may 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 Labour Act, there is no statutory provision on annual leave but 15-20 working days per 12 months of continuous service is the norm.

Sick Leave

An employee is entitled 12 paid days of sick leave in any calendar year, certified by a registered medical practitioner.

The Employees Compensation Act makes 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 but a written medical certificate from a medical doctor stating that she should not or cannot work must be provided.

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 Labour Act does not contain provisions on paternity leave. However, in Lagos State, civil servants are entitled to ten days’ paternity leave within the first two months from 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 Labour Act, the practice is that such employees are entitled to bereavement/compassionate leave ranging from 1-2 weeks, with each employee free to set its own rules.

Public Holidays

There are about 11 public holidays per year.

Benefits to the Employee in Nigeria

Statutory Benefits

Pension

The law 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’s contributions plus accrued interest. The worker’s disability has to be reassessed every 2 years by a qualified doctor.

Transportation

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

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 and is renewable annually.

Employers must show that there are no suitably qualified Nigerian employees for the positions to be occupied by expatriates and, where approval is granted, Nigerians are expected to be trained to fill the positions over time. These requirements do not apply to the employment of Nigerian nationals and nationals of member states of the Economic Community of West African States (ECOWAS).

Every foreign national intending to work in Nigeria must have the valid working and residence permits (the Combined Expatriate Residence Permit and Aliens Card), usually applied for by the company seeking to employ the foreigner.

There are two types of visas which may be granted, depending on the length of stay. For short-term assignments, an employer must apply for and receive a temporary work permit. This allows the employee to carry out 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, and foreign nationals who meet the conditions for grant of a visa may apply for as many short-term visas as required.

For long-term assignments, the employer should apply for a “subject-to-regularization” visa (STR), where the expatriate quota is required. The expatriate quota states the positions in the company that will be occupied by expatriate staff. Upon arrival in Nigeria, the employee will need to validate his/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 9th
10 Id el Kabir Holiday July 10th
11 Christmas Day December 27th
12 Boxing Day December 28th

Several other holidays are observed, either unofficially at a national level or by official local public observance.

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