Nigeria

Overview

Nigeria is the largest economy (21st largest in the world) and the most populous country in Africa. It has an emerging market and a re-emergent manufacturing sector that caters to the demands of the West Africa subcontinent. Nigeria is largely dependent on its oil and natural gas exports for its economy, but the country encourages the inflow of foreign investments for industrial diversification. Foreign and domestic investors are treated equally, especially those companies are encouraged that are interested in joint ventures and long-term investment.

Currency: Nigerian Naira

Principal language: Hausa, Igbo, Yoruba, Urhobo

Government: Federal Presidential Republic

Capital City: Abuja

Major Cities: Lagos, Benin City

Employment Contracts

The Labour Act makes it mandatory for employers to provide a written contract to employees, with all the important details of the employment, 3 months before their employment commencement date.

An employment contract may stipulate a probationary period, which may be extended. Except when it is an apprenticeship contract, any person under age 16 is not allowed to enter into an employment contract.

Work/Time Regulations

Regular work schedule is set by a mutual employer-employee agreement or with a collective bargaining agreement within an organization or industry.

The Labour Act prohibits children under age 16 from working more than 4 uninterrupted hours or more than 8 hours per day.

The weekly time off may be substituted with compensatory time off, in case circumstances do not permit a rest day in a particular week, within the following 14 days’ or the payment of overtime wages.

Employers must get an hour of rest after working 6 or more hours a day. Female workers are not allowed to engage in manual labor during night shifts. Minors are not allowed to work in night shifts.

Overtime
The Labour Act of Nigeria does not specify a wage rate for overtime. Employment contract or collective bargaining agreement establishes the payment for overtime in the country.

Leave

Holidays
The Labour Act of Nigeria does not specify a wage rate for overtime. Employment contract or collective bargaining agreement establishes the payment for overtime in the country.

  • Jan. 1: New Year's Day
  • Good Friday
  • Easter Monday
  • May 1: Worker's Day
  • May 29: Democracy Day
  • Oct. 1: Nigerian National Day
  • Dec. 25: Christmas Day
  • Dec. 26: Boxing Day

In addition, the following Islamic holidays are also celebrated. Those dates vary every year:

  • Eid al-Fitr
  • Eid al-Adha
  • Eid-el-Malud.

Employees working on a public holiday receive 200% of their usual pay. Public holidays falling on a weekend are not shifted to another date.

Annual Leave
Employees are entitled to annual leave for a minimum of 6 working days at full pay after 12 months of uninterrupted service. Workers aged less than 16 years, including apprentices, must get fully paid annual leave of 12 working days.

Employees and employers may delay taking or granting accrued annual leave for up to 24 months, but employers are not allowed to pay remuneration in lieu of annual leave.

Maternity Leave
A pregnant employee gets 12 weeks of maternity leave which commences 6 weeks prior to her due date. If she has worked for the employer for 6 months or more before the beginning of her maternity leave, the employer is required to pay at the rate of 50% of her regular wages during maternity leave.

A pregnant employee is not allowed to work for 6 weeks after delivery. After returning to work, she gets an additional 30 minutes nursing time twice a day to feed or look after her child.

Paternity Leave
There is no provision for paternity leave in Nigeria.

Sick Leave
An employee gets paid sick leave for 12 days per year, subject to certification by a health care provider.

Other Leave
An employee can take compassionate leave for certain events in the family such as the death of a loved one. The duration of absence will depend on the situation in question. The employer needs to continue paying the worker's salary fully or partially in this period.

Benefits

There is no statutory retirement age in Nigeria, and it is determined by an individual worker's terms and conditions of employment, although if an employee retires before age 50, he or she needs to wait for 6 months before starting to receive benefits.

Employers and employees need to make a total social security pension contribution of 18%, of which 10% need to be borne by the employer and the remainder by employees. These contributions go into the private Retirement Savings Accounts (RSA).

An employer may choose to take complete responsibility for making pension contributions, and when this is the case, the rate of employer contribution goes up to 20% of employees’ monthly remuneration.

Old-age Pension
Employers in Nigeria must make a minimum payment of 1% of monthly payroll into Employees' Compensation Fund.

An employee or the employee's survivor is eligible to claim compensation from the fund in cases of death, injury, disease, disability, mental stress and hearing impediments arising in the course of employment. In addition to compensation, the fund offers vocational, rehabilitation and counseling services to injured employees.

Workers’ Compensation
Employers in Nigeria need to make a minimum contribution of monthly payroll’s 1% into the Employees' Compensation Fund.

Employees or their survivors qualify to claim compensation from the fund in cases of a disease, death, injury, mental stress, disability and hearing problems that arise during employment. In addition to compensation, the fund provides rehabilitation, vocational and counseling services for injured employees.

Life Insurance
Employers are required to provide a life insurance policy for each of their employees to guarantee a lump sum payment equaling three times the employee's annual income or more.

Mandatory Health Insurance
Nigeria requires all employers to provide employees with an approved health insurance as part of its National Health Insurance Program. The plan guarantees employees with some minimum benefits and is regulated by the National Health Insurance Scheme (NHIS).

All employers in the organized private sector employing 10 or more workers are required to withhold contributions for National Health Insurance Scheme (NHIS) and make some additional contributions too.

Employers are required to contribute 10% of employee salary and withhold 5% of employee salary. Additional charges apply to employees who wish to get their spouse and up to 4 children enrolled in the scheme.

How GPS can Help

With our Global PEO/Employer of Record services, companies can expand into Nigeria and hire their employees without having to establish a branch office or subsidiary in Nigeria.

  • Your candidate is hired via our Nigeria PEO. If needed, we can also help you find the right talent in any country with our comprehensive global staffing services.
  • Your new employee begins work quickly as we take care of employment contracts, statutory and non-statutory benefits, and running their payroll - all in full compliance with Nigeria laws.
  • Global PEO Services experts manage all day-to-day operational issues such as employee expenses, and severance/termination if required.
  • With no contractor risks, pass on the compliance burden to Global PEO Services.

Spin Off/M&A Support

  • Ensure continuity of payroll, benefits and HR support when acquiring or spinning off a business with employees overseas.

24/7 Support in 100+ Countries

  • Empower your teams with 24/7 support and a single point-of-contact model in which experienced client services directors are in continuous communication with information and advice.
  • We are backed by a mix of 300+ multidisciplinary experts from HR, Payroll, Finance, Tax, and Legal domains who are ready to respond to the expected and unexpected needs of your business on the shortest notice.

Easy Visibility into Your Employee Time & Attendance and Benefits Data
With our Global PEO, you get access to Mihi, our proprietary SaaS solution for time and attendance, vacation, leave management and benefits enrollment and managements. Mihi enables clients to have easy access to employee data in real time. It is designed specifically for companies with a global workforce, especially when working in multiple countries with low headcounts.

Ready for Growth When You Are
When ready, we can seamlessly transition you from the PEO/EOR model to your own legal entity and provide ongoing international HR, finance, legal, compliance and staffing support. Lean more about our end-to-end international expansion services.