An Employer of Record (EOR) acts as the legal employer for workers, handling HR responsibilities like payroll, taxes, and compliance, while the company directs the employees’ day-to-day tasks. This setup allows businesses to hire globally without establishing a local entity.
Hiring workers from Nigeria offers benefits due to the country’s large and young workforce and growing economy. Nigeria is known for its talent in technology, finance, and natural resources sectors. As the most populous country in Africa and the continent’s largest economy, Nigeria presents significant opportunities for businesses looking to expand their operations.
Employment in Nigeria has been growing, with the country’s workforce expanding rapidly. According to recent data, Nigeria’s labor force is estimated at over 65 million people, with a significant portion being young and tech-savvy individuals. However, the country also faces high unemployment rates, creating a competitive job market with a pool of skilled workers seeking opportunities.
To use an EOR in Nigeria, there are 6 basic steps to ensure you are set up properly:
- Find talent to hire in Nigeria
- Compare using an EOR to setting up a legal entity in Nigeria
- Get the information needed from your talent
- Choose an EOR provider with expertise in Nigeria
- Communicate your hiring needs to the EOR
- Have the EOR set up the contracts and hiring procedure
An EOR manages payroll, taxes, and benefits administration, ensuring compliance with local laws and regulations, thus simplifying the employment process for companies.
Different labor laws in Nigeria, such as those governing work hours, termination processes, and mandatory benefits, must be considered when hiring remotely. The hiring process in Nigeria involves identifying talent, ensuring compliance with local employment laws, and executing contracts, typically facilitated by an EOR for companies without a local presence.
1. Find talent to hire in Nigeria
Businesses should leverage a combination of local and international platforms to find talent to hire in Nigeria. LinkedIn remains a crucial tool for talent acquisition, allowing companies to search for candidates actively seeking opportunities and to headhunt passive candidates.
Local job boards such as Jobberman and NgCareers are popular among Nigerian job seekers and offer extensive listings across various industries. These platforms are particularly useful for finding candidates with specific skills and experience relevant to the Nigerian market.
Industry-specific job boards and professional associations can be valuable resources for specialized roles. For example, the Nigerian Society of Engineers is a good platform for finding engineering talent.
Recruitment agencies with expertise in the Nigerian market, such as Workforce Group and Phillips Consulting, can provide tailored solutions for companies seeking to navigate the complexities of hiring in Nigeria.
2. Compare using an EOR to setting up a legal entity in Nigeria
When working with employees in Nigeria, you need to consider working with an EOR to set up your legal entity. An Employer of Record offers a quicker, less complex route to hiring local staff, bypassing the need for a formal company presence. This approach suits companies looking to test the Nigerian market or expand quickly without significant upfront investment.
An EOR manages all local employment laws, tax, and compliance issues, assuming responsibility for hired employees. This setup allows companies to start operations in weeks, compared to the months required to establish a legal entity.
On the other hand, setting up a legal entity in Nigeria offers greater control and the ability to customize business operations and policies. However, establishing a legal entity involves complex registration processes, significant upfront fees, and a deeper understanding of local laws and tax regulations.
Here’s a comparison of key factors:
| Factor | Employer of Record | Setting Up Legal Entity in Nigeria |
|---|---|---|
| Setup Time | 1-2 weeks | 2-3 months |
| Initial Cost | Low (typically only employee costs) | High (significant registration fees and capital requirements) |
| Ongoing Cost | Moderate (EOR fees + employee costs) | Variable (operational costs, compliance, etc.) |
| Complexity | Low (EOR handles most administrative tasks) | High (requires understanding of Nigerian business laws) |
| Control over Operations | Limited (company directs daily work, EOR handles employment) | Full (complete control over all aspects of business) |
| Compliance Management | Handled by EOR (payroll, taxes, social security) | Company Responsibility (requires local expertise) |
| Scalability | Highly Flexible (easy to add or remove employees) | Less Flexible (changes may require legal procedures) |
| Local Expertise Required | Minimal (EOR provides guidance) | Extensive (need for local legal and tax advisors) |
| Suitable for | Market entry, testing Nigerian market, short to medium-term projects | Long-term presence, full operations, strategic expansion |
| Risk | Lower (EOR assumes employer liabilities) | Higher (company bears all legal and financial risks) |
3. Get the information needed from your talent
To hire employees in Nigeria, you need some information about them. Typically, you’ll need the following essential personal information:
- Employee’s full name
- National Identification Number (NIN)
- Address
- Date of birth
- Bank account details for salary payments
Additionally, you’ll need a comprehensive job description, including title, duties, and place of work. Employment contracts in Nigeria should detail the contract type, start date, salary, work hours, and other employment conditions.
It’s important to note that Nigeria’s employment contracts must be in writing. The contract should include details on remuneration, work hours, holiday entitlement, and notice period for termination.
4. Choose an EOR provider with expertise in Nigeria
When choosing an EOR provider to work with in Nigeria, selecting one with deep expertise in the Nigerian market and a strong understanding of local labor laws to ensure compliance and smooth business operations is crucial.
Evaluate the provider’s experience managing employee onboarding, payroll, and legal compliance in Nigeria. Look for a provider with a proven track record of working successfully with companies similar to yours, and check their reputation through client case studies or reviews.
Assess the range of services offered to see if they align with your needs, such as visa and work permit support, employee benefits management, and payroll processing. It’s important to choose a provider that offers comprehensive employment services and is flexible enough to adapt to changes in Nigerian labor laws.
Consider the provider’s technology and platforms, ensuring they offer secure, user-friendly systems with strong data protection measures. Evaluate their pricing models, look for transparency in fees, and assess the cost-effectiveness of your business.
What are the best EOR providers to use in Nigeria?
| EOR Provider | Why It’s a Good Fit for Nigeria |
|---|---|
| Deel | Extensive experience in African markets, strong compliance support for Nigerian labor laws, and expertise in managing payroll for multiple currencies |
| Remote | Comprehensive coverage across Nigeria, strong focus on tech industry needs, and offers competitive benefits packages tailored to Nigerian standards |
| Atlas | Strong presence in Nigeria, offers tailored solutions for different industries, and provides robust compliance support for Nigerian labor laws |
| Multiplier | Specializes in emerging markets, offers dedicated support for navigating Nigeria’s complex regulatory environment, and provides competitive pricing |
| Oyster HR | User-friendly platform for managing employees in Nigeria, offers detailed guidance on Nigerian employment regulations, and provides support for equity compensation |
These EOR providers all offer services tailored to the unique challenges of hiring in Nigeria, including compliance with local labor laws, payroll management in Nigerian Naira, and navigation of the complex Nigerian business environment.
5. Communicate your hiring needs to the EOR
Communicating your hiring needs to the EOR to ensure the process aligns with your company goals and legal requirements is important. Provide a detailed job description, including the title, responsibilities, required qualifications, and skills.
Specify the job’s expected start date, location (including whether it’s remote or onsite), and any specific requirements related to Nigerian labor laws. Outline the proposed salary, bonuses, commission structures, and other compensation benefits, keeping in mind Nigeria’s cultural norms and expectations.
Clarify the contract terms, including whether it’s a full-time or part-time position, and detail the working hours, including any flexibility or shift requirements. Discuss your company culture, growth plans, and how the position fits into future expansion in the Nigerian market.
By accurately representing these aspects, the EOR can find the right talent and ensure legal and administrative compliance with Nigerian labor laws.
6. Have the EOR set up the contracts and hiring procedure
Once you have chosen which provider to work with and communicated your hiring needs, the EOR will set up the contracts and hiring procedure, ensuring compliance with Nigerian labor laws and employment practices.
The EOR drafts employment contracts that comply with Nigerian labor laws, including specific terms regarding job details, working hours, and termination procedures. They’ll also manage the necessary documentation for tax, social security, and payroll setup, adhering to mandatory withholdings and reporting requirements.
If necessary, the EOR assists in obtaining work visas for expatriate employees, collects personal and bank account information for payroll, and outlines the onboarding procedures by Nigerian employment laws. They’ll ensure your company complies with local regulations, adjusting contracts and practices as laws change.
Additionally, the EOR administers benefits and handles formal onboarding, including the introduction to company systems and culture, ensuring a smooth start for your new Nigerian-based employees.
What help does an EOR provide in Nigeria’s payroll, taxes, and benefits administration?
The EOR will support Nigeria’s payroll, taxes, and benefits administration, ensuring compliance with complex local laws. It calculates and processes employee salaries, withholds the correct tax amounts, and handles social security contributions.
For payroll, the EOR manages regular pay periods (typically monthly in Nigeria), calculates and deducts Pay As You Earn (PAYE) tax, and ensures compliance with the National Housing Fund (NHF) contributions. They handle year-end reporting and ensure all payroll-related documentation is maintained as per Nigerian labor law.
In terms of taxes, the EOR manages personal income tax deductions, which in Nigeria are progressive and range from 7% to 24%, depending on the income bracket. They also handle contributions to the National Housing Fund (2.5% of basic salary) and the Pension Fund (a minimum of 8% from the employee and 10% from the employer).
For benefits, the EOR typically administers the mandatory National Health Insurance Scheme (NHIS) contributions. They may also manage other benefits such as life insurance, disability insurance, and annual leave entitlements, which are common in Nigerian employment packages.
What labor laws do you need to consider when hiring in Nigeria?
There are a few key labor laws to consider when hiring in Nigeria. Nigeria’s approach to labor laws generally protects employee rights, emphasizing written employment contracts and specific leave entitlements.
Employment contracts
The Labor Act governs employment contracts in Nigeria and must be in writing. Key elements that must be included are:
- Job title and description
- Compensation details
- Hours of work
- Leave entitlements
- The notice period for termination
It’s important to note that probationary periods, while not mandatory, are common practice in Nigeria and typically last for 3-6 months.
Working hours and paid holidays
The standard work week in Nigeria is 40 hours, typically eight hours per day for five days a week. Nigeria observes 13 public holidays annually, which are paid days off for employees.
Taxes
Nigeria operates a Pay As You Earn (PAYE) system for personal income tax. Employers are responsible for deducting and remitting these taxes to the relevant tax authorities.
Severance pay
While there’s no statutory severance pay in Nigeria, it’s common for employers to provide severance packages, especially for long-serving employees or in cases of redundancy.
Annual leave
Employees in Nigeria are entitled to at least six working days of paid annual leave after 12 months of continuous service. Many employers offer more than this statutory minimum.
Maternity leave
Female employees are entitled to 12 weeks of maternity leave with at least 50% of their salary. Some employers offer more generous maternity leave policies to attract and retain talent.
Here’s a summary of these key labor laws:
| Labor Law | Key Points |
|---|---|
| Employment Contracts | Must be written, include job details, compensation, and working hours |
| Working Hours | 40-hour standard work week, 13 paid public holidays |
| Taxes | PAYE system, employers responsible for deduction and remittance |
| Severance Pay | Not statutory but common practice |
| Annual Leave | Minimum 6 working days after 12 months of service |
| Maternity Leave | 12 weeks with at least 50% salary |
How does the hiring process work in Nigeria?
When hiring staff in Nigeria, employers typically follow a structured process while adhering to local labor laws and cultural norms. The process usually involves:
- Defining the job requirements and creating a job description
- Advertising the position through various channels, including local job boards and LinkedIn
- Reviewing applications and resumes
- Conducting initial screenings, often via phone or video calls
- Holding in-person or virtual interviews with shortlisted candidates
- Performing background checks and contacting references (with the candidate’s permission)
- Making a job offer to the selected candidate
- Negotiating terms and finalizing the employment agreement
- Completing required documentation, including registering the employee with relevant authorities
- Onboarding the new employee
Throughout this process, employers must ensure compliance with Nigerian labor laws, including the requirement for written employment contracts. It’s also important to be aware of cultural sensitivities and norms in Nigeria, such as the importance of formal greetings and respect for hierarchy in business settings.
Is Nigeria a relatively easy country to hire employees remotely through an EOR?
Yes, Nigeria is a relatively easy country to hire employees remotely through an Employer of Record (EOR). Nigeria is becoming an increasingly accessible country for hiring employees remotely through an Employer of Record (EOR).
The country’s large, young, and tech-savvy workforce, coupled with ongoing internet connectivity and digital infrastructure improvements, makes it an attractive destination for remote hiring.
Here are five pros and three cons for hiring employees in Nigeria:
Pros
Cons
Despite these challenges, the benefits of accessing the Nigerian talent market often outweigh the complexities, especially when working with an experienced EOR provider who can navigate the intricacies of Nigerian employment laws and practices. The country’s growing economy and increasing focus on digital skills make it an attractive option for companies looking to build diverse, talented teams.
