Employer of record in Nigeria: costs, rules and how to hire
Hire someone in Nigeria without opening your own Nigerian company.
An employer of record (EOR) can handle local employment while you manage the person’s work. Start by confirming the provider’s coverage and the arrangement available for your specific hire.
By Employ Borderless · We help you understand and compare EOR services.
How does an employer of record in Nigeria work?
Three parties, two contracts: the EOR employs the person under a local employment contract, your company signs a service agreement with the EOR and directs the day-to-day work. Which arrangement is legal and sensible in Nigeria is decided by the questions below.
Your company
Choose the person, agree their role and manage their daily work.
The employer of record
Handles the agreed employment, payroll and HR services through the employing entity named in your contract.
Your employee
Works with your team under a local employment contract with the EOR’s employing entity.
- Do you already have an entity in this country?
- How many people are you hiring, and for how long?
- Is the work genuinely independent, or is it a job?
- Who carries the employment risk if the arrangement is challenged?
What each route means in full
- Your own entity
- Choose it when: You already have a company here, or you are committing to a substantial local team for the long term.You become the legal employer. You arrange payroll, benefits, filings and employment support yourself, and you carry the setup and running cost.
- Employer of record
- Choose it when: You have a person to hire here, want them employed properly, and do not want to open a company for it.The provider is the legal employer through its own entity. You direct the work and pay one invoice covering salary, employer costs and the service fee.
- Independent contractor
- Choose it when: The work is genuinely independent: their own business, their own methods, their own clients.A contract for services, not employment. The label does not decide the status; how the person actually works does, and getting it wrong is reclassified after the fact.
Hiring in Nigeria: the short version
One classification decides which rules apply to your Nigerian hire. The Labour Act's definition of worker covers manual and clerical work but excludes people performing administrative, executive, technical or professional functions, among other exclusions. Most EOR hires are in the excluded group, so the Act's leave table of six working days and its one-day-to-one-month notice ladder may not govern them at all, and their entitlements come from the contract and other applicable law instead. Settle that question before copying a statutory minimum into an offer letter.
The employer cost is easier to pin down. On a NGN 500,000 monthly salary that is fully pensionable, employer pension at 10% is NGN 50,000, NSITF at 1% is NGN 5,000 and the monthly ITF accrual is NGN 5,000, so salary plus those employer contributions is NGN 560,000. Health insurance, the group life premium, other benefits, equipment and provider charges sit on top.
Your first hire in Nigeria in five decisions
Five things settle a Nigerian hire, and the figures behind each are worked through further down this page.
- Entity or EOR. Whether the provider holds the Ministry of Labour recruiters' licence for the relevant recruitment and outsourcing activities.
- Employee or contractor. The Labour Act recognises oral, written, express and implied employment arrangements, so a contract's title settles nothing.
- Budget line. Employer pension of at least 10% of defined monthly emoluments, NSITF at 1% of payroll and ITF at 1% of annual payroll for covered employers.
- Notice reality. One day to one month for covered workers, with the contract governing everyone else and no universal statutory severance formula.
- Realistic start. After pension and health-insurance enrolment and, for a foreign hire, the employer's approved expatriate quota and the R2A route.
EOR, entity, or contractor in Nigeria?
Price the hire first, because the employer additions in Nigeria are small enough that the comparison often turns on administration rather than on cost.
What can a NGN 500,000 monthly salary cost?
Use the same salary and benefit assumptions when comparing provider quotes. This example assumes the whole salary is pensionable and the employer is covered by the ordinary pension, NSITF and ITF requirements.
| Budget item | Monthly illustration |
|---|---|
| Gross salary | NGN 500,000 |
| Employer pension at 10% | NGN 50,000 |
| NSITF contribution at 1% | NGN 5,000 |
| Monthly accrual for annual ITF contribution at 1% | NGN 5,000 |
| Salary plus those employer contributions | NGN 560,000 |
| Health insurance and group life premium | Add the actual scheme and insurance costs |
| Other benefits, equipment and provider charges | Add the agreed amounts |
The example assumes a covered employee on NGN 500,000 monthly, all of it counting as pensionable emoluments, NSITF assessed at 1%, and an employer with at least 25 employees outside a free trade zone. Add health insurance, group life premiums, agreed benefits, equipment and provider fees, and keep employee pension and PAYE deductions separate from these employer additions.
Get a quote you can compare
Six items make a quote comparable.
- The legal employer, licence and who handles disputes and employee support.
- The pensionable salary base and contribution arrangements.
- The NSITF assessment, ITF coverage and applicable health-insurance scheme.
- The group life cover, other benefits and any annual bonus.
- The service fee, payment currency, exchange-rate method and deposits.
- The cost and process if the role changes, employment ends or you move to another employer.
ITF is an annual payroll contribution, and the example spreads it across monthly budgeting. Employee pension and PAYE reduce the employee's gross pay and should not be added again as ordinary employer charges. If the employer agrees to fund the entire pension, a different statutory rule needs checking.
For a lasting local operation, compare the provider's total cost with the registration and administration your own employing business would need. There is no universal headcount at which one route becomes the right choice.
Moving from an employer of record to your own Nigerian entity
Because the worker definition decides whether the statutory entitlements apply at all, the first thing to establish about a Nigerian move is which entitlements the person actually has, and then which of them you are taking on.
Settle in writing before the move: whether service with the provider counts towards the notice and any contractual severance; how the pension scheme record and the retirement savings account are handed over, since the account follows the employee and the contributing employer changes; how accrued leave is settled; and what happens to the employee compensation scheme registration.
I have not read a Nigerian government source on the effect of a change of employer on continuity, so I am not going to state one. Put it to a Nigerian adviser. Given the point above about who the employer is, also ask the provider to confirm in writing that it is the employer of record in law and not a payroll administrator, because a move away from a payroll administrator is a different exercise entirely.
How to hire employees in Nigeria
Three routes are open, and the recruiters' licence is the check that most first-time buyers skip.
An employer of record can employ a person in Nigeria and administer their contract, payroll and employment benefits while your team directs the agreed work. Identify the actual employing company and the division of responsibilities in writing. The Labour Act recognises employment for the service of another person, and an EOR label does not replace employment duties, recruitment licensing or an assessment of your own business and tax obligations.
A contract's title alone does not settle whether the relationship is employment, because the Labour Act recognises oral, written, express and implied employment arrangements. Review the actual duties, control and working relationship before using a contractor. A payroll service can process wages while your company remains the employer, so confirm who is employing the person rather than relying on the EOR, PEO or contractor label.
A PEO or payroll-service label does not establish who employs the person. Compare the employment and service agreements, and assess company and tax obligations alongside the hiring route. Read how an employer of record works and compare EOR and PEO responsibilities.
From an agreed role to the first payroll
Five steps run from the job definition to the first payment.
- Set the duties, work location, hours, gross salary and intended start date.
- Confirm the local employing company, licence and the rules covering the role.
- Collect the employee's identity, payroll, pension and work-permission details.
- Agree the contract, benefits, equipment and responsibilities between all parties.
- Complete the required registrations and confirm the first payday and deductions.
Ask the provider for a timetable based on this employee's documents and status. Immigration, benefit enrolment and unresolved contract terms can affect the start date, and a generic onboarding promise does not settle those requirements.
How long the first hire takes, and what sets the date
Documentation and, where the person is not Nigerian, the expatriate quota and permit procedures set the date in Nigeria. The employment paperwork itself is quick.
So rather than a number of weeks, here is the sequence, in the order the steps actually gate each other. Work backwards from whichever one is unresolved in your case, because that is the one holding your date and the rest will not be.
- Agree the offer and the written terms, and settle whether the role falls inside the Labour Act's worker definition, because the statutory tables only apply if it does.
- Confirm the right to work, and where an expatriate quota position and a permit are needed, treat that as the critical path, since it is measured in months.
- Have the employing entity register the person for the pension scheme and the employee compensation scheme.
- Collect the tax identification and bank documentation the payroll needs.
- Land the start date on the payroll cut-off so the first month and the leave accrual begin in the cycle you expect.
Ask whether an expatriate quota position is available before you agree any start date for a non-Nigerian hire. Nothing else on this list comes close in duration.
What should you budget for hiring in Nigeria?
Your budget includes salary, employer contributions, agreed benefits and the EOR fee. Ask for a quote for the actual role and salary.
- Gross salary
- Employer contributions
- Benefits and other costs
- EOR service fee
- Gross salary: 100
- Employer social contributions: 11%
- Benefits and EOR fee: quoted per hire
The numbers behind this figure
| Cost | Amount |
|---|---|
| Gross salary | 100 |
| Employer social contributions | 11% |
| Benefits and EOR fee | Quoted per hire |
Source: ISSA, 2024
Published EOR base fees among providers covering Nigeria range from $99 to $699 per employee/month. These are provider base prices, not a quote for this hire or the total employment cost.
Employer contribution benchmarks · 2026
These stored OECD benchmarks help with initial planning. Earnings ceilings, employee circumstances and later changes can affect the actual charge; use the EOR’s itemised quote for your budget.
| Contribution | Rate |
|---|---|
| Pension | 10% |
| Employee Compensation Scheme (NSITF) | 1% |
| Industrial Training Fund | 1% |
Employer contributions and employee deductions
Six items sit above and below the salary line, and two of them have conflicting published thresholds.
| Item | Who pays | Base or coverage |
|---|---|---|
| Ordinary contributory pension | Employer at least 10%; employee at least 8% | Defined monthly emoluments, at least basic pay plus housing and transport |
| NSITF compensation scheme | Employer | Published rate of 1% of total employee payroll; confirm assessment |
| ITF training fund | Covered employer | 1% of annual payroll; enacted threshold of at least 25 employees outside a free trade zone |
| National Housing Fund | Participating employee | Private-sector voluntary wording; 2.5% of monthly income at or above the wage threshold |
| Health insurance | According to the applicable scheme | Check employer and employee contributions and the state scheme |
| Group life insurance | Employer | Premium for insured benefit of at least three times annual total emoluments |
For covered contributory-pension employment, the ordinary minimum contributions are 10% from the employer and 8% from the employee. The monthly emoluments base follows the employment contract but cannot be lower than basic salary plus housing and transport allowances, so apply the rate to that defined base rather than automatically to basic salary alone.
PenCom's published FAQ instructs private-sector organisations with three or more employees to participate, while section 2(2) of the Pension Reform Act names fifteen or more employees and section 2(3) addresses organisations with fewer than three. Employers in the three-to-fourteen range should confirm their obligations with PenCom rather than assume exemption. PenCom also states that foreign employees may participate voluntarily, so assess the person and actual employer.
The employer deducts the employee contribution and remits both shares through the pension system no later than seven working days after salaries are paid. Keep the employee's retirement savings account and the remittance evidence, and note that PenCom's guidance states that missed contributions attract at least 2% per month of the outstanding contribution, in addition to the arrears.
Section 4(4) of the Pension Reform Act says that an employer electing to bear the full responsibility of the scheme must contribute at least 20% of monthly emoluments, while PenCom's FAQ instead describes an 18% minimum for full employer funding. Confirm the arrangement with PenCom and apply the statutory requirement unless a valid applicable legal basis establishes otherwise, and do not price full employer funding by adding the ordinary 10% and 8% shares alone.
NSITF's published guidance gives an Employees' Compensation Scheme contribution of 1% of total employee payroll, funded by the employer. The Employees' Compensation Act allows risk-based assessments and prohibits passing the employer's contribution to employees through payroll deductions, so confirm the actual assessment and registration with NSITF.
The Business Facilitation Act replaces ITF Act section 6: employers with at least 25 employees, operating outside a free trade zone, contribute 1% of annual payroll. Older agency materials and some procurement notices still show five employees or NGN 50 million turnover. Obtain confirmation for the establishment and any tender requirements instead of silently using the older threshold.
The Business Facilitation Act changes the National Housing Fund rule: a private-sector employee earning at least the national minimum wage may contribute 2.5% of monthly income, while public-sector employees and self-employed people meeting the threshold remain subject to mandatory wording. For a private-sector hire, record any participation and deduction authority, and do not automatically describe the housing fund as a compulsory employer payroll tax.
Ask for a sample payslip and the employer-cost breakdown before agreeing the package. Confirm the actual pension base, registrations, contribution deadlines and evidence of remittance, and assess corporate taxes and the tax position of your own business separately.
What an employer of record adds to the employment cost
Budget the provider fee as a third line, next to gross pay and the employer contributions above. Across the market it runs from $99 to $799 per employee per month, or 8 to 20% of salary, and where a quote sits in that range is decided by the work rather than by the country: headcount, how much of the administration you hand over, and whether the provider is pricing a single hire or a team. I treat a quote at the bottom of the range as a question rather than a win, because the cheap number is usually the one with the fewest things inside it.
What the fee buys is the employment itself: the employing entity, the payroll run, the filings and the employer-side administration. What it does not buy is the cost of employing the person. Gross pay, the employer pension contribution, the employee compensation scheme contribution and the industrial training levy where it applies are yours, and the page's own worked example above is a better guide to the real cost than a percentage. Ask for a quote that separates the fee from the pass-through costs, priced in naira, because a single blended figure hides which half moves when pay changes.
Average salary in Nigeria by occupation
Gross monthly earnings of employees per ISCO-08 occupation group, in NGN, from the ILO's official labour statistics. These stored survey figures for Nigeria have reference year 2024. Use these survey earnings to benchmark an offer before an EOR quote turns it into total employer cost.
| Occupation group | Monthly (NGN) | Approx. USD |
|---|---|---|
| All occupations | 76,489 | $52 |
| Managers · ISCO 1 | 106,454 | $72 |
| Professionals · ISCO 2 | 75,811 | $51 |
| Technicians and associate professionals · ISCO 3 | 93,785 | $63 |
| Clerical support workers · ISCO 4 | 73,343 | $50 |
| Service and sales workers · ISCO 5 | 58,952 | $40 |
| Skilled agricultural, forestry and fishery workers · ISCO 6 | 53,935 | $36 |
| Craft and related trades workers · ISCO 7 | 72,955 | $49 |
| Plant and machine operators and assemblers · ISCO 8 | 91,001 | $62 |
| Elementary occupations · ISCO 9 | 56,610 | $38 |
Source: ILOSTAT, the International Labour Organization's statistics database (average monthly earnings of employees, both sexes), reference year 2024.
How to hire through an EOR in Nigeria
- Step 1
Define your hire
Prepare the role, work location, salary, working hours and target start date.
- Step 2
Confirm the local hiring route
Ask the provider to confirm that its employing arrangement fits this role and location, including any restrictions.
- Step 3
Review the full quote and contract
Check the legal employer, total costs, benefits, responsibilities and exit terms before signing.
- Step 4
Complete onboarding
Coordinate employment documents, required checks, equipment and the payroll cut-off with the EOR.
- Step 5
Keep employment changes coordinated
Manage the work and tell the EOR about proposed pay, leave, contract or termination changes before they take effect.
What should the EOR arrange before your hire in Nigeria starts?
Confirm the employment terms, work eligibility, payroll and pension arrangements before the start date. Ask which local rules and agreements apply to your employee.
What catches employers out in Nigeria
Several rows below are places where agency guidance and the enacted law say different things, which is a reason to get a written answer rather than a screenshot.
Resolve these points before making the offer
Ask the provider to answer each of these against the actual employer and employee.
| Point | Why it matters |
|---|---|
| Employee classification | Labour Act leave and notice rules do not automatically cover every professional hire |
| 2026 income tax | Use the new marginal bands and deductions |
| Employer size | Pension, minimum-wage and training-fund coverage have different rules |
| Health insurance | Coverage is required, but the cost depends on the applicable scheme |
| Housing fund | Private-sector participation uses voluntary wording in the enacted amendment |
| Exit payments | Notice, earned benefits and redundancy payments need separate calculations |
The number of hires in your team may differ from the size of the provider's employing establishment. Where agency guidance conflicts with the enacted law, get the specific obligation confirmed before configuring payroll.
Use a salary benchmark for the role and location. The national minimum wage establishes a floor for covered employment, and it does not tell you what a software engineer, sales manager or other professional should earn.
What types of employment contracts exist in Nigeria?
The written-particulars duty and the leave and notice tables all hang on the same classification, so start there rather than with the template.
Write down the terms that apply to this employee
The Labour Act's definition of worker covers manual and clerical work but excludes people performing administrative, executive, technical or professional functions, among other exclusions. Many professional EOR hires therefore need their contract, collective terms and other applicable laws assessed separately. The Act's leave and notice tables below are labelled for covered workers, and they are not a universal benefit package for every employee.
For Labour Act workers, the employer must provide written employment particulars within three months of starting, covering the employer and worker details, duties, fixed-term expiry if relevant, notice, pay calculation and frequency, hours, leave, sickness and other special conditions. A written contract containing those particulars can satisfy the requirement. Give the employee clear agreed terms before they start as a practical hiring step.
| Contract topic | What to agree |
|---|---|
| Employment | Legal employer, duties, location, start date and duration |
| Pay and benefits | Gross salary, allowances, payday, pension, insurance and bonus terms |
| Working arrangements | Hours, breaks, leave, remote work, equipment and expenses |
| Ending employment | Probation, notice, early termination and the applicable procedure |
| Business information | Privacy, confidentiality, intellectual property and return of equipment |
Probation, fixed terms and later changes
The Labour Act does not set a general three-month probation maximum for every private-sector employee. Put any probation period, assessment, extension and notice terms in the contract and check the rules that cover the role, because a probation label does not remove pay, pension or other obligations that already apply.
For covered workers, the written particulars must state when a fixed-term contract expires, and the Labour Act recognises expiry of the agreed period, death of the worker and termination under its notice provisions. Check the contract and applicable rules before early termination or renewal, and do not assume that a fixed term removes employment benefits or creates a general six-month exemption from employment protection.
For covered workers, give written notice of changes to the required particulars at the earliest opportunity and no later than one month after the change. A transfer from one employer to another under Labour Act section 10 requires the worker's consent and endorsement by an authorised labour officer. When changing providers, agree how service, accrued pay and benefits will be treated before moving the employment.
Labour Act section 8 requires a worker entering an employment contract to be medically examined by a registered practitioner at the employer's expense, and the state authority can grant specified exemptions, including certain agricultural or nearby non-dangerous employment. Check whether the worker and job fall within the requirement and handle health information under the data-protection rules.
Protect work product and confidential information
Under the Copyright Act 2022, copyright normally starts with the author unless an agreement or specific statutory exception changes that result, so do not assume that paying a private-sector employee automatically transfers every copyright to the employer or your client business. Copyright assignments and exclusive licences must be written. In an EOR arrangement, document the necessary rights from the creator through the employing entity to your business.
Define confidential information, permitted use, access and return of company materials in the employment and provider agreements. Assess any post-employment restriction under the applicable law and circumstances, because a standard one-year non-compete or a generic salary-compensation percentage should not be treated as automatically enforceable. Keep confidentiality and ownership as separate contract issues.
The Labour Act prohibits making employment conditional on joining or not joining a trade union, and protects workers from dismissal or other prejudice for union membership or permitted union activity. Check the applicable collective terms for pay, hours, benefits, disputes and redundancy, and ask the provider to explain which agreement, if any, covers the actual employing business and role.
Misclassification risk, and who is actually the employer
Nigeria's risk has an extra dimension, because what is often unclear is not employee or contractor but which entity is the employer at all. A contract's title alone does not settle whether the relationship is employment, and the Labour Act recognises oral, written, express and implied employment arrangements. Source: the approved Nigerian contractor guidance, Labour Act via nelex.gov.ng, checked 18 September 2026.
"Implied" is the word doing the work there. An arrangement nobody papered as employment can still be employment on the facts, which means the absence of a contract is not a defence, it is an evidential problem for whoever is arguing the arrangement was something else.
Our own guidance then says the thing I would put to any provider here: a payroll service can process wages while your company remains the employer, so confirm who is employing the person rather than relying on the label of employer of record, professional employer organisation or contractor. In a market where those labels are used loosely, get the answer in the service agreement. Source: the approved Nigerian contractor guidance, checked 18 September 2026.
What taxes and social contributions apply in Nigeria?
Income tax was rewritten for 2026, so a payroll configuration carried over from last year will be wrong in both the bands and the reliefs.
Employee income tax from January 2026
The scale runs in six slices after permitted deductions.
| Annual chargeable-income slice | Marginal rate |
|---|---|
| First NGN 800,000 | 0% |
| Next NGN 2,200,000 | 15% |
| Next NGN 9,000,000 | 18% |
| Next NGN 13,000,000 | 21% |
| Next NGN 25,000,000 | 23% |
| Above NGN 50,000,000 | 25% |
For 2026 chargeable individual income, the first NGN 800,000 is taxed at 0%, the next NGN 2.2 million at 15%, the next NGN 9 million at 18%, the next NGN 13 million at 21%, the next NGN 25 million at 23%, and income above NGN 50 million at 25%. These are marginal bands after permitted deductions rather than rates applied to all gross salary, and section 58 separately excludes an individual earning the statutory minimum wage.
The 2025 Nigeria Tax Act permits specified individual deductions, including qualifying pension, National Housing Fund and health-insurance contributions, eligible home-loan interest and life-insurance or annuity payments. Rent relief is 20% of actual annual rent paid, capped at NGN 500,000, with accurate disclosure and supporting evidence. Do not carry the old consolidated relief allowance into a 2026 calculation.
The Nigeria Tax Administration Act allocates most resident individuals to the relevant state or FCT tax authority, with specified federal categories. Employers must file the annual employee-emoluments return by 31 January for the preceding year, and employees have their own annual-return obligation. Confirm the relevant authority's current PAYE remittance process and monthly deadlines rather than paying every employee's tax to one federal agency.
What pay and leave should your offer in Nigeria cover?
Agree pay, working patterns, paid leave and benefits as part of the offer. These affect both your hiring budget and how you plan the employee’s work.
- Paid annual leave: 6 days
- Public holidays: 11 days
- The rest of the year: 348 days
The numbers behind this figure
| Entitlement | Days a year |
|---|---|
| Paid annual leave (statutory minimum) | 6 days |
| Public holidays (national) | 11 days |
| Total statutory paid days off | 17 days |
Source: National government, 2026; Employ Borderless research, 2026. Statutory minimums. Eligibility, accrual and collective agreements can change what an individual employee receives.
How does payroll and compensation work in Nigeria?
Nigeria sets a wage floor but leaves working hours to agreement, which makes the contract do more work here than in most countries.
Set the salary, payday and benefit package
Nigeria's national minimum wage is NGN 70,000 per month following the amendment signed on 29 July 2024. It is a wage floor for covered employment rather than an average salary or a standard offer for a professional role. Confirm the employer's coverage and any higher contractual, collective or applicable public-sector terms before setting pay.
Section 4 of the 2019 gazetted Act lists exemptions for establishments employing fewer than 25 people, specified part-time and commission or piece-rate arrangements, seasonal work such as agriculture, and covered shipping or aviation employment, with other exemptions available through a gazetted order. Check the actual employing establishment and any later applicable order before relying on an exemption, because the number of people your business hires through a larger provider is not necessarily the provider's establishment size.
This review did not establish a current official national average monthly salary suitable for pricing a professional hire. The NBS survey page contains earnings bands across different pay periods and warns that its case counts are not population summary statistics. Compare offers for the occupation, seniority, location and benefits, and do not label an old ILO value or an unweighted survey band as Nigeria's current average pay.
Labour Act workers' wages must fall due at intervals no longer than one month. Agree the payment schedule and calculation in the written terms, and separate gross pay, lawful deductions and net pay, because a monthly salary figure does not establish the employee's take-home amount.
The Labour Act does not impose a universal thirteenth-month salary or annual performance-bonus amount. Put any promised bonus, allowance, eligibility conditions and payment date in the contract or relevant policy, and check applicable collective terms. A benefit can become an obligation through the agreed employment terms even when it is not a universal statutory minimum.
Agree the working schedule and overtime
The Labour Act sets normal hours through agreement, collective bargaining or an industrial wages board where relevant, and it does not prescribe one universal forty-hour or forty-eight-hour private-sector week. State the workdays, hours, time zone and any shift or on-call arrangements in the employment terms, checking the rules for the actual role.
For Labour Act workers working six hours or more, rest intervals normally total at least one hour, subject to the Act's exceptions for continuous operations and unforeseen circumstances. In every seven-day period, allow at least 24 consecutive hours of rest. A reduced weekly rest period must be compensated by corresponding time off as soon as possible and no later than fourteen days, or overtime wages for the shortfall.
Work beyond the normal hours fixed under Labour Act section 13 is overtime, and the Act does not impose universal multipliers of 1.5, 2 or 3 for every private-sector employee. Check the contract, collective agreement and any applicable wage or sector rules, and record authorisation, hours worked and the agreed compensation.
For a team working across time zones, document the expected overlap and the process for extra hours. Keep the employee's gross salary separate from their net pay and from the full employer budget.
What benefits and leave are employees entitled to in Nigeria?
The statutory floor is six working days of annual leave for covered workers, which is why almost every real offer here is a contractual package rather than a statutory one.
Make the leave package clear
The table sets out the Labour Act position for covered workers.
| Benefit | Labour Act position for covered workers |
|---|---|
| Annual leave | At least six working days after twelve months; twelve for workers under sixteen |
| Temporary sickness | Up to twelve working days of statutory wages per calendar year, with medical certification |
| Maternity | Six weeks before and six after birth; at least half wages after six months of qualifying service |
| Nursing breaks | Half an hour twice during the working day |
| Paternity and other family leave | Check contract, collective terms and any applicable sector or state rules |
A worker under sixteen, including an apprentice, has at least twelve working days. Professional and other excluded employees need their own contractual and applicable legal entitlements checked, and many employers agree a more generous package.
Covered workers can agree to defer annual leave, but the holiday-earning period cannot exceed 24 months, and the Act prohibits paying cash instead of this holiday while employment continues. On departure after the qualifying periods of at least six months described in section 18(4), the Act provides a proportion of one week of normal pay relative to twelve months. Check the exact service period and any better contractual entitlement.
The Labour Act provides wages for up to twelve working days in a calendar year for temporary illness certified by a registered medical practitioner, while the contract continues and the worker is otherwise ready to work. The employer can request an examination by its nominated qualified practitioner, and the statutory wage calculation excludes overtime and other allowances. Occupational injury is governed separately.
For women within the Labour Act's maternity provisions, a medical certificate supports leave in the six weeks before expected confinement, and work is prohibited for six weeks after birth. With at least six months of continuous employment before the absence, pay must be at least 50% of the wages that would otherwise have been earned. The Act also restricts dismissal notice during this absence and qualifying medically certified pregnancy-related illness, subject to any prescribed duration. Check role coverage and any more generous contract or applicable sector terms.
A woman covered by Labour Act section 54 who is nursing her child must be allowed half an hour twice a day during working hours for that purpose. Arrange the breaks with the work schedule and check whether the employer's policy provides more generous support.
The Labour Act does not set a universal private-sector paid entitlement for paternity, adoption, bereavement or marriage leave, and public-service rules and particular state or sector arrangements should not be presented as rules for every private employer. Put the agreed family-leave benefits, pay and notice process in the employment terms and check any applicable collective agreement.
Public holidays and insurance
Nigeria's holiday calendar includes New Year, Easter, Workers' Day, Democracy Day, Independence Day, Christmas, Boxing Day and the declared Muslim festival holidays. Dates and additional days depend on official announcements: the Ministry confirmed Workers' Day on 1 May 2026, Easter holidays on 3 and 6 April, and Eid ul Mawlid on 25 August, and Democracy Day was declared for 12 June 2026. Keep public holidays separate from annual-leave days and check announcements before scheduling work.
The NHIA Act requires residents to obtain health insurance and includes private-sector employers and employees in its coverage provisions. Employers must register themselves and their employees and make the required contributions under the applicable scheme, with formal-sector contribution rates determined by the relevant state scheme councils. Private supplementary cover can be added, and there is no single national employer percentage that accurately prices every hire.
The contributory-pension rules require employer-funded group life insurance of at least three times an employee's annual total emoluments. That amount is the insured benefit rather than a three-times-salary premium charged each year. Obtain a premium quote and confirm that the employee is covered from the start of the relevant employment.
Offer letters should state the actual leave and insurance package. For a professional role excluded from the Labour Act worker definition, do not assume that copying the statutory minimum table settles the employee's entitlement, and check the contract and other applicable rules.
What happens if you need to end employment in Nigeria?
Discuss the proposed change with the EOR before giving notice or promising an exit payment. Ask it to confirm the procedure, timing and costs for the employee’s circumstances.
The numbers behind this figure
| Obligation | Weeks of salary |
|---|---|
| Statutory notice | 3.2 weeks |
| Statutory severance | 0 weeks |
| Total statutory exit cost | 3.2 weeks |
Nigeria sits at number 108 of 190 countries for statutory exit cost in our Termination Cost Index.
What are the termination and compliance rules in Nigeria?
There is no universal statutory severance in Nigeria, so what an exit costs depends on the contract and, for a redundancy, on what the employer negotiates.
Manage remote work, records and personal data
For a remote hire, record the workplace, hours, equipment, connectivity, expenses, security and incident-reporting process in the employment terms, because the Labour Act does not set one universal private-sector home-office allowance. Assess safety and employee data handling for the actual home-working arrangement, and review another country's rules separately if the person will work abroad.
The Nigeria Data Protection Act 2023 requires a lawful basis for employee-data processing, clear information about use and recipients, data minimisation, appropriate security and retention tied to a lawful purpose. Consent is one possible basis, while necessary contract performance and legal obligations are others, and a controller of major importance must appoint a data protection officer. Review registration, applicable NDPC directives and any high-risk processing before using payroll, monitoring or recruitment tools.
A controller must notify NDPC within 72 hours of becoming aware of a personal-data breach likely to risk individuals' rights and freedoms, and a likely high-risk breach must also be communicated immediately to affected people, subject to the Act's provisions. Document the legal basis and safeguards for transfers outside Nigeria, because an overseas payroll platform does not remove those duties.
The Employees' Compensation Act covers employment-related injury and disease through NSITF. Employers must report qualifying injuries within seven days of occurrence and occupational disease within seven days of receiving the relevant information, while employment-related deaths must be reported immediately. Keep the incident and medical records and use the statutory claims process, and note that the employer cannot require employees to fund its scheme contribution.
Plan an exit before ending the provider service
Notice for covered workers runs with service on a short ladder.
| Continuous service | Labour Act notice for covered workers |
|---|---|
| Three months or less | One day |
| More than three months, less than two years | One week |
| Two years, less than five years | Two weeks |
| Five years or more | One month |
Notice of at least one week must be written, and the day notice is given is excluded. Check contractual notice and the rules for professionals and other excluded employees separately.
Labour Act section 11 allows termination on notice and preserves the parties' rights in qualifying conduct cases to end the contract without notice. A service cancellation between your business and an EOR does not itself complete the employee's termination. Review the employment contract, applicable protections, evidence and procedure before communicating the decision, and avoid assuming that every dismissal is valid whenever notice pay is offered.
For covered workers, all money wages must be paid on or before the notice period expires. A payment in lieu of statutory notice uses money wages excluding overtime and other allowances under section 11(9), subject to any more generous entitlement. Add outstanding salary, eligible leave payments and contractual benefits, and do not substitute a universal severance formula for the actual calculation.
For covered workers, inform the trade union or workers' representative of the reasons for and extent of the anticipated redundancy. Apply last-in-first-out within the affected category, subject to relative merit including skill, ability and reliability, and make every effort to negotiate redundancy payments where the worker is not protected by applicable regulations. There is no universal Labour Act severance amount of one week or one month per year for every employee.
Under section 50 of the Nigeria Tax Act, qualifying personal compensation, including compensation for loss of employment, is exempt up to NGN 50 million, and only the excess is a chargeable gain. The payer must deduct and remit tax due on employment-loss compensation. This does not make all final salary, notice pay or other payroll items tax-free, so classify each payment correctly.
Ask the provider to explain the grounds, procedure, amounts due and employee communications for the actual case. Commercial notice under your EOR service agreement and notice owed to the employee are separate obligations.
Work permission for a foreign hire
For the R2A employment route, the Nigeria Immigration Service requires a job with a Nigerian employer holding an approved expatriate quota, the employment and acceptance letters, and supporting identity and qualification documents. The employer applies for the quota, the worker follows the consular process and regularises residence after entry through CERPAC, and the worker may work only for the sponsoring employer. Confirm the person's existing rights and the provider's eligibility before setting a start date.
Obtain a written immigration plan for the person and sponsoring employer, and confirm any quota, visa and residence steps before travel or work. A change of employing company or a period working from another country needs a fresh assessment.
How the guide stays current
Check the selected official topic pages and legislation monthly, keeping the source capture, legal review, effective date and statistical period separate. A detected change needs review before it changes an approved fact, and the employer should assess any effect on payroll, benefits, contracts and employee communications. A successful fetch is not legal verification.
These are stored source rules, not a case-specific termination calculation. Confirm the applicable procedure and current requirements before acting.
Choose an EOR for your hire in Nigeria
Compare the employing entity, itemised costs, local support, payroll deadlines and what happens if you change or end the arrangement.
Questions about hiring in Nigeria
What licence and registrations should a Nigerian EOR have?
The Ministry of Labour requires recruiters' licences for relevant recruitment and outsourcing activities. Its published requirements include employment documents, client contracts, pension arrangements, medical facilities and NSITF registration. Ask the provider for its current licence, the employing entity and evidence of the registrations and benefits that apply to your hire. A commercial EOR agreement alone does not establish compliance.
Should I use an EOR or employ through my own Nigerian business?
Compare your planned activities, the duration and size of the team, the full employment budget and the administration your business can manage. An EOR can administer local employment; your own employing business needs its own registrations, payroll and employment arrangements. Check the business and tax implications of either route.
Check the facts behind this guide
Each reviewed fact links to its source and shows its validation date and effective period. Monthly review does not mean that every rule changes monthly. Statistical benchmarks retain their original data periods.
View sourced facts and review dates
| Fact | Value | Source | Effective / data period | Last validated |
|---|---|---|---|---|
| An EOR employs the person through a local employing business | An employer of record can employ a person in Nigeria and administer their contract, payroll and employment benefits while your team directs the agreed work. Identify the actual employing company and the division of responsibilities in writing. The Labour Act recognises employment for the service of another person; an EOR label does not replace employment duties, recruitment licensing or an assessment of your own business and tax obligations. | Federal Ministry of Labour and Employment, NELEX statutory copy | ||
| Check the provider’s recruitment and labour-supply permissions | The Ministry of Labour requires recruiters’ licences for relevant recruitment and outsourcing activities. Its published requirements include employment documents, client contracts, pension arrangements, medical facilities and NSITF registration. Ask the provider for its current licence, the employing entity and evidence of the registrations and benefits that apply to your hire. A commercial EOR agreement alone does not establish compliance. | Federal Ministry of Labour and Employment | ||
| Some Labour Act rules apply to a narrower group of workers | The Labour Act’s definition of worker covers manual and clerical work but excludes people performing administrative, executive, technical or professional functions, among other exclusions. Many professional EOR hires therefore need their contract, collective terms and other applicable laws assessed separately. The Act’s leave and notice tables below are labelled for covered workers; they are not a universal benefit package for every employee. | Federal Ministry of Labour and Employment, NELEX statutory copy | ||
| Use a contractor only for an independent working arrangement | A contract’s title alone does not settle whether the relationship is employment. The Labour Act recognises oral, written, express and implied employment arrangements. Review the actual duties, control and working relationship before using a contractor. A payroll service can process wages while your company remains the employer; confirm who is employing the person rather than relying on the EOR, PEO or contractor label. | Federal Ministry of Labour and Employment, NELEX statutory copy | ||
| Give covered workers written terms within three months | For Labour Act workers, the employer must provide written employment particulars within three months of starting. Include the employer and worker details, duties, fixed-term expiry if relevant, notice, pay calculation and frequency, hours, leave, sickness and other special conditions. A written contract containing those particulars can satisfy the requirement. Give the employee clear agreed terms before they start as a practical hiring step. | Federal Ministry of Labour and Employment, NELEX statutory copy | ||
| Record changed terms and protect continuity | For covered workers, give written notice of changes to the required particulars at the earliest opportunity and no later than one month after the change. A transfer from one employer to another under Labour Act section 10 requires the worker’s consent and endorsement by an authorised labour officer. When changing providers, agree how service, accrued pay and benefits will be treated before moving the employment. | Federal Ministry of Labour and Employment, NELEX statutory copy | ||
| Agree probation and its notice terms in the contract | The Labour Act does not set a general three-month probation maximum for every private-sector employee. Put any probation period, assessment, extension and notice terms in the contract and check the rules that cover the role. A probation label does not remove pay, pension or other obligations that already apply. | Federal Ministry of Labour and Employment, NELEX statutory copy | ||
| A fixed term needs clear dates and termination terms | For covered workers, the written particulars must state when a fixed-term contract expires. The Labour Act recognises expiry of the agreed period, death of the worker and termination under its notice provisions. Check the contract and applicable rules before early termination or renewal; do not assume that a fixed term removes employment benefits or creates a general six-month exemption from employment protection. | Federal Ministry of Labour and Employment, NELEX statutory copy | ||
| NGN 70,000 per month, subject to statutory coverage | Nigeria’s national minimum wage is NGN 70,000 per month following the amendment signed on 29 July 2024. It is a wage floor for covered employment, not an average salary or a standard offer for a professional role. Confirm the employer’s coverage and any higher contractual, collective or applicable public-sector terms before setting pay. | National Pension Commission, minimum wage implementation circular | Nigeria: private-sector hiring; Labour Act worker classification, actual duties, employer coverage, collective terms and the employment contract affect the result | |
| Check the enacted minimum-wage exemptions | Section 4 of the 2019 gazetted Act lists exemptions for establishments employing fewer than 25 people, specified part-time and commission or piece-rate arrangements, seasonal work such as agriculture, and covered shipping or aviation employment. Other exemptions can be made through a gazetted order. Check the actual employing establishment and any later applicable order before relying on an exemption; the number of people your business hires through a larger provider is not necessarily the provider’s establishment size. | Federal Government Gazette, archived by Gazettes Africa | ||
| Use a salary benchmark for the role and location | This review did not establish a current official national average monthly salary suitable for pricing a professional hire. The NBS survey page contains earnings bands across different pay periods and warns that its case counts are not population summary statistics. Compare offers for the occupation, seniority, location and benefits; do not label an old ILO value or an unweighted survey band as Nigeria’s current average pay. | National Bureau of Statistics (NBS) | ||
| Agree the payday; wage intervals cannot exceed one month for covered workers | Labour Act workers’ wages must fall due at intervals no longer than one month. Agree the payment schedule and calculation in the written terms, and separate gross pay, lawful deductions and net pay. A monthly salary figure does not establish the employee’s take-home amount. | Federal Ministry of Labour and Employment, NELEX statutory copy | ||
| State any bonus or thirteenth-month payment in the agreed package | The Labour Act does not impose a universal thirteenth-month salary or annual performance-bonus amount. Put any promised bonus, allowance, eligibility conditions and payment date in the contract or relevant policy, and check applicable collective terms. A benefit can become an obligation through the agreed employment terms even when it is not a universal statutory minimum. | Federal Ministry of Labour and Employment, NELEX statutory copy | ||
| Use the 2026 annual personal-income-tax bands | For 2026 chargeable individual income, the first NGN 800,000 is taxed at 0%; the next NGN 2.2 million at 15%; the next NGN 9 million at 18%; the next NGN 13 million at 21%; the next NGN 25 million at 23%; and income above NGN 50 million at 25%. These are marginal bands after permitted deductions, not rates applied to all gross salary. Section 58 separately excludes an individual earning the statutory minimum wage. | National Assembly, Nigeria Tax Act 2025 | Nigeria: private-sector hiring; Labour Act worker classification, actual duties, employer coverage, collective terms and the employment contract affect the result | |
| Apply eligible deductions and documented rent relief | The 2025 Nigeria Tax Act permits specified individual deductions, including qualifying pension, National Housing Fund and health-insurance contributions, eligible home-loan interest and life-insurance or annuity payments. Rent relief is 20% of actual annual rent paid, capped at NGN 500,000, with accurate disclosure and supporting evidence. Do not carry the old consolidated relief allowance into a 2026 calculation. | National Assembly, Nigeria Tax Act 2025 | Nigeria: private-sector hiring; Labour Act worker classification, actual duties, employer coverage, collective terms and the employment contract affect the result | |
| Register PAYE with the tax authority for the employee’s circumstances | The Nigeria Tax Administration Act allocates most resident individuals to the relevant state or FCT tax authority, with specified federal categories. Employers must file the annual employee-emoluments return by 31 January for the preceding year; employees have their own annual-return obligation. Confirm the relevant authority’s current PAYE remittance process and monthly deadlines rather than paying every employee’s tax to one federal agency. | Tax Appeal Tribunal, Nigeria Tax Administration Act 2025 | Nigeria: private-sector hiring; Labour Act worker classification, actual duties, employer coverage, collective terms and the employment contract affect the result | |
| Ordinary pension contributions are at least 10% employer and 8% employee | For covered contributory-pension employment, the ordinary minimum contributions are 10% from the employer and 8% from the employee. The monthly emoluments base follows the employment contract but cannot be lower than basic salary plus housing and transport allowances. Apply the rate to that defined base rather than automatically to basic salary alone. | National Pension Commission (PenCom) | ||
| Check pension coverage against PenCom’s guidance and the Act | PenCom’s published FAQ instructs private-sector organisations with three or more employees to participate, while section 2(2) of the Pension Reform Act names fifteen or more employees and section 2(3) addresses organisations with fewer than three. Employers in the three-to-fourteen range should confirm their obligations with PenCom rather than assume exemption. PenCom also states that foreign employees may participate voluntarily; assess the person and actual employer. | National Pension Commission (PenCom) | ||
| Remit pensions within seven working days of salary payment | The employer deducts the employee contribution and remits both shares through the pension system no later than seven working days after salaries are paid. Keep the employee’s retirement savings account and the remittance evidence. PenCom’s guidance states that missed contributions attract at least 2% per month of the outstanding contribution, in addition to the arrears. | National Pension Commission (PenCom) | ||
| Provide employer-funded group life cover for covered employees | The contributory-pension rules require employer-funded group life insurance of at least three times an employee’s annual total emoluments. That amount is the insured benefit, not a three-times-salary premium charged each year. Obtain a premium quote and confirm that the employee is covered from the start of the relevant employment. | National Pension Commission (PenCom) | ||
| Budget for the employer’s NSITF contribution | NSITF’s published guidance gives an Employees’ Compensation Scheme contribution of 1% of total employee payroll, funded by the employer. The Employees’ Compensation Act allows risk-based assessments and prohibits passing the employer’s contribution to employees through payroll deductions. Confirm the actual assessment and registration with NSITF. | Nigeria Social Insurance Trust Fund (NSITF) | ||
| The enacted training-fund threshold is twenty-five employees | The Business Facilitation Act replaces ITF Act section 6: employers with at least 25 employees, operating outside a free trade zone, contribute 1% of annual payroll. Older agency materials and some procurement notices still show five employees or NGN 50 million turnover. Obtain confirmation for the establishment and any tender requirements instead of silently using the older threshold. | Nigerian Investment Promotion Commission, enacted Business Facilitation Act | Nigeria: private-sector hiring; Labour Act worker classification, actual duties, employer coverage, collective terms and the employment contract affect the result | |
| Private-sector housing-fund contributions are voluntary under the amendment | The Business Facilitation Act changes the National Housing Fund rule: a private-sector employee earning at least the national minimum wage may contribute 2.5% of monthly income. Public-sector employees and self-employed people meeting the threshold remain subject to mandatory wording. For a private-sector hire, record any participation and deduction authority; do not automatically describe NHF as a compulsory employer payroll tax. | Nigerian Investment Promotion Commission, enacted Business Facilitation Act | Nigeria: private-sector hiring; Labour Act worker classification, actual duties, employer coverage, collective terms and the employment contract affect the result | |
| Health-insurance coverage is required; costs depend on the scheme | The NHIA Act requires residents to obtain health insurance and includes private-sector employers and employees in its coverage provisions. Employers must register themselves and their employees and make the required contributions under the applicable scheme. Formal-sector contribution rates are determined by the relevant state scheme councils. Private supplementary cover can be added; there is no single national employer percentage that accurately prices every hire. | National Health Insurance Authority, enacted 2022 Act | ||
| A NGN 500,000 salary needs a budget above NGN 560,000 in this example | Assume a covered employee earns NGN 500,000 monthly, all of it counts as pensionable emoluments, NSITF is assessed at 1%, and the employer has at least 25 employees outside a free trade zone. Employer pension is NGN 50,000, NSITF NGN 5,000 and the monthly ITF accrual NGN 5,000: salary plus those items is NGN 560,000. Add health insurance, group life premiums, agreed benefits, equipment and provider fees. Employee pension and PAYE deductions are separate from these employer additions. | National Pension Commission (PenCom) | ||
| Normal hours are set by agreement or applicable collective rules | The Labour Act sets normal hours through agreement, collective bargaining or an industrial wages board where relevant. It does not prescribe one universal forty-hour or forty-eight-hour private-sector week. State the workdays, hours, time zone and any shift or on-call arrangements in the employment terms, checking the rules for the actual role. | Federal Ministry of Labour and Employment, NELEX statutory copy | ||
| Covered workers have daily breaks and weekly rest | For Labour Act workers working six hours or more, rest intervals normally total at least one hour, subject to the Act’s exceptions for continuous operations and unforeseen circumstances. In every seven-day period, allow at least 24 consecutive hours of rest. A reduced weekly rest period must be compensated by corresponding time off as soon as possible and no later than fourteen days, or overtime wages for the shortfall. | Federal Ministry of Labour and Employment, NELEX statutory copy | ||
| Agree overtime pay rather than assuming a universal premium | Work beyond the normal hours fixed under Labour Act section 13 is overtime. The Act does not impose universal multipliers of 1.5, 2 or 3 for every private-sector employee. Check the contract, collective agreement and any applicable wage or sector rules, and record authorisation, hours worked and the agreed compensation. | Federal Ministry of Labour and Employment, NELEX statutory copy | ||
| Covered adult workers receive at least six working days after twelve months | Under the Labour Act, a covered worker earns at least six working days of fully paid holiday after twelve months of continuous service. A worker under sixteen, including an apprentice, has at least twelve working days. Professional and other excluded employees need their own contractual and applicable legal entitlements checked; many employers agree a more generous package. | Federal Ministry of Labour and Employment, NELEX statutory copy | ||
| Plan leave use, carry-over and departure payments | Covered workers can agree to defer annual leave, but the holiday-earning period cannot exceed 24 months. The Act prohibits paying cash instead of this holiday while employment continues. On departure after the qualifying periods of at least six months described in section 18(4), the Act provides a proportion of one week’s normal pay relative to twelve months. Check the exact service period and any better contractual entitlement. | Federal Ministry of Labour and Employment, NELEX statutory copy | ||
| Covered workers can receive up to twelve working days of sick pay | The Labour Act provides wages for up to twelve working days in a calendar year for temporary illness certified by a registered medical practitioner, while the contract continues and the worker is otherwise ready to work. The employer can request an examination by its nominated qualified practitioner. The statutory wage calculation excludes overtime and other allowances. Occupational injury is governed separately. | Federal Ministry of Labour and Employment, NELEX statutory copy | ||
| Labour Act maternity protection covers six weeks before and after birth | For women within the Labour Act’s maternity provisions, a medical certificate supports leave in the six weeks before expected confinement, and work is prohibited for six weeks after birth. With at least six months of continuous employment before the absence, pay must be at least 50% of the wages that would otherwise have been earned. The Act also restricts dismissal notice during this absence and qualifying medically certified pregnancy-related illness, subject to any prescribed duration. Check role coverage and any more generous contract or applicable sector terms. | Federal Ministry of Labour and Employment, NELEX statutory copy | ||
| The Labour Act provides two half-hour nursing breaks | A woman covered by Labour Act section 54 who is nursing her child must be allowed half an hour twice a day during working hours for that purpose. Arrange the breaks with the work schedule and check whether the employer’s policy provides more generous support. | Federal Ministry of Labour and Employment, NELEX statutory copy | ||
| Agree paternity, adoption and other family leave explicitly | The Labour Act does not set a universal private-sector paid entitlement for paternity, adoption, bereavement or marriage leave. Public-service rules and particular state or sector arrangements should not be presented as rules for every private employer. Put the agreed family-leave benefits, pay and notice process in the employment terms and check any applicable collective agreement. | Federal Ministry of Labour and Employment, NELEX statutory copy | ||
| Follow the official holiday declarations for the relevant year | Nigeria’s holiday calendar includes New Year, Easter, Workers’ Day, Democracy Day, Independence Day, Christmas, Boxing Day and the declared Muslim festival holidays. Dates and additional days depend on official announcements; the Ministry confirmed Workers’ Day on 1 May 2026, Easter holidays on 3 and 6 April, and Eid ul Mawlid on 25 August. Democracy Day was declared for 12 June 2026. Keep public holidays separate from annual-leave days and check announcements before scheduling work. | Federal Ministry of Interior | ||
| Covered-worker notice ranges from one day to one month | Labour Act notice for either party is one day for service of three months or less; one week for more than three months but less than two years; two weeks from two years to less than five; and one month from five years. Notice of at least one week must be written, and the day notice is given is excluded. Check contractual notice and the rules for professionals and other excluded employees separately. | Federal Ministry of Labour and Employment, NELEX statutory copy | ||
| Match the exit process to the contract and reason | Labour Act section 11 allows termination on notice and preserves the parties’ rights in qualifying conduct cases to end the contract without notice. A service cancellation between your business and an EOR does not itself complete the employee’s termination. Review the employment contract, applicable protections, evidence and procedure before communicating the decision; avoid assuming that every dismissal is valid whenever notice pay is offered. | Federal Ministry of Labour and Employment, NELEX statutory copy | ||
| Calculate notice pay, outstanding wages and earned benefits separately | For covered workers, all money wages must be paid on or before the notice period expires. A payment in lieu of statutory notice uses money wages excluding overtime and other allowances under section 11(9), subject to any more generous entitlement. Add outstanding salary, eligible leave payments and contractual benefits. Do not substitute a universal severance formula for the actual calculation. | Federal Ministry of Labour and Employment, NELEX statutory copy | ||
| Redundancy has consultation, selection and payment requirements | For covered workers, inform the trade union or workers’ representative of the reasons for and extent of the anticipated redundancy. Apply last-in-first-out within the affected category, subject to relative merit including skill, ability and reliability. Make every effort to negotiate redundancy payments where the worker is not protected by applicable regulations. There is no universal Labour Act severance amount of one week or one month per year for every employee. | Federal Ministry of Labour and Employment, NELEX statutory copy | ||
| Report occupational injuries and keep compensation records | The Employees’ Compensation Act covers employment-related injury and disease through NSITF. Employers must report qualifying injuries within seven days of occurrence and occupational disease within seven days of receiving the relevant information; employment-related deaths must be reported immediately. Keep the incident and medical records and use the statutory claims process. The employer cannot require employees to fund its scheme contribution. | NSITF, Employees’ Compensation Act 2010 | ||
| Put ownership and onward IP transfers in writing | Under the Copyright Act 2022, copyright normally starts with the author unless an agreement or specific statutory exception changes that result. Do not assume that paying a private-sector employee automatically transfers every copyright to the employer or your client business. Copyright assignments and exclusive licences must be written. In an EOR arrangement, document the necessary rights from the creator through the employing entity to your business. | Nigerian Copyright Commission | ||
| Protect confidential information with terms suited to the role | Define confidential information, permitted use, access and return of company materials in the employment and provider agreements. Assess any post-employment restriction under the applicable law and circumstances; a standard one-year non-compete or a generic salary-compensation percentage should not be treated as automatically enforceable. Keep confidentiality and IP ownership as separate contract issues. | Federal Ministry of Labour and Employment, NELEX statutory copy | ||
| Agree remote-work arrangements without inventing a statutory allowance | For a remote hire, record the workplace, hours, equipment, connectivity, expenses, security and incident-reporting process in the employment terms. The Labour Act does not set one universal private-sector home-office allowance. Assess safety and employee data handling for the actual home-working arrangement, and review another country’s rules separately if the person will work abroad. | Federal Ministry of Labour and Employment, NELEX statutory copy | ||
| Use a lawful basis and an employee privacy notice | The Nigeria Data Protection Act 2023 requires a lawful basis for employee-data processing, clear information about use and recipients, data minimisation, appropriate security and retention tied to a lawful purpose. Consent is one possible basis; necessary contract performance and legal obligations are others. A controller of major importance must appoint a data protection officer. Review registration, applicable NDPC directives and any high-risk processing before using payroll, monitoring or recruitment tools. | National Assembly, assented Data Protection Act hosted by PLAC | ||
| Prepare for breach reporting and overseas data transfers | A controller must notify NDPC within 72 hours of becoming aware of a personal-data breach likely to risk individuals’ rights and freedoms. A likely high-risk breach must also be communicated immediately to affected people, subject to the Act’s provisions. Document the legal basis and safeguards for transfers outside Nigeria; an overseas payroll platform does not remove those duties. | National Assembly, assented Data Protection Act hosted by PLAC | ||
| Check the sponsoring employer and the correct immigration route | For the R2A employment route, the Nigeria Immigration Service requires a job with a Nigerian employer holding an approved expatriate quota, the employment and acceptance letters, and supporting identity and qualification documents. The employer applies for the quota, the worker follows the consular process and regularises residence after entry through CERPAC. The worker may work only for the sponsoring employer. Confirm the person’s existing rights and the provider’s eligibility before setting a start date. | Nigeria Immigration Service | ||
| Check union and collective-agreement obligations | The Labour Act prohibits making employment conditional on joining or not joining a trade union, and protects workers from dismissal or other prejudice for union membership or permitted union activity. Check the applicable collective terms for pay, hours, benefits, disputes and redundancy. A provider should explain which agreement, if any, covers the actual employing business and role. | Federal Ministry of Labour and Employment, NELEX statutory copy | ||
| Review changes before updating employment decisions | Check the selected official topic pages and legislation monthly. Keep the source capture, legal review, effective date and statistical period separate. A detected change needs review before it changes an approved fact, and the employer should assess any effect on payroll, benefits, contracts and employee communications. A successful fetch is not legal verification. | Federal Ministry of Finance | ||
| Check the covered worker’s medical examination requirement | Labour Act section 8 requires a worker entering an employment contract to be medically examined by a registered practitioner at the employer’s expense. The state authority can grant specified exemptions, including certain agricultural or nearby non-dangerous employment. Check whether the worker and job fall within the requirement and handle health information under the data-protection rules. | Federal Ministry of Labour and Employment, NELEX statutory copy | ||
| An employer funding the whole pension should check the statutory twenty-percent rule | Section 4(4) of the Pension Reform Act says that an employer electing to bear the full responsibility of the scheme must contribute at least 20% of monthly emoluments. PenCom’s FAQ instead describes an 18% minimum for full employer funding. Confirm the arrangement with PenCom and apply the statutory requirement unless a valid applicable legal basis establishes otherwise; do not price full employer funding by adding the ordinary 10% and 8% shares alone. | National Pension Commission, Pension Reform Act 2014 | ||
| Separate compensation tax from ordinary final salary | Under section 50 of the Nigeria Tax Act, qualifying personal compensation, including compensation for loss of employment, is exempt up to NGN 50 million; only the excess is a chargeable gain. The payer must deduct and remit tax due on employment-loss compensation. This does not make all final salary, notice pay or other payroll items tax-free: classify each payment correctly. | National Assembly, Nigeria Tax Act 2025 | Nigeria: private-sector hiring; Labour Act worker classification, actual duties, employer coverage, collective terms and the employment contract affect the result |