Planning to hire employees in Nigeria? Here’s a quick guide

Companies looking to hire in Nigeria have several options, including registering a company locally under the Companies and Allied Matters Act (CAMA), hiring independent contractors, and utilizing Employer of Record (EOR) services as offered by Payoneer Workforce Management.

Nigeria is Africa’s largest economy, with a young, English-speaking workforce and a tech sector that’s expanding rapidly. These factors make it a strong market for foreign companies building their virtual or in-house teams in the West African country. 

But employment in Nigeria comes with specific rules around tax withholding, leave policies, and termination. This article will outline key employment regulations in Nigeria to assist in successfully recruiting your team.

How to hire in Nigeria

There’s more than one way to hire employees in Nigeria, and the right approach depends on your budget, timeline, and the number of people you plan to bring on.

1) Set up a legal entity in Nigeria

The Companies and Allied Matters Act (CAMA) requires foreign companies to register a local entity before they can directly employ anyone in Nigeria. 

If you’re building a large, permanent team in the country, this route gives you the most control. You interact with government agencies directly and manage every aspect of the employment relationship yourself.

That said, the registration process is expensive, time-consuming, and comes with ongoing admin. 

For companies testing a new market or hiring just a handful of people, it’s usually more than what’s needed. As an alternative, you can use an Employer of Record (EOR) to streamline hiring without setting up an entity.

2) Hire contractors in Nigeria

Bringing on independent contractors is faster and cost-friendly upfront. You skip entity registration, and the contractor typically handles their own taxes. 

However, Nigerian law draws a clear line between contractors and employees. If authorities determine that a contractor is actually functioning like an employee, the company faces misclassification penalties, including back pay, fines, and potential legal claims.

Alternatively, a contractor management system makes it easier to stay organized with payments, invoicing, and classification compliance as you scale.

3) Use an Employer of Record (EOR) in Nigeria

For most companies, expanding into Nigeria is convenient with an Employer of Record (EOR) solution. The EOR acts as the legal employer on paper as support with handling employment contracts, benefits, payroll, and tax filings. It’s faster than opening an entity.

Payoneer Workforce Management, for instance, operates as an EOR across 160+ countries, which means you can bring on team members in Nigeria and other markets from a single platform.

Where to find employees in Nigeria

Once you’ve decided on your hiring method, the next step is actually finding candidates. Nigeria has a massive English-speaking labor pool, particularly in tech, finance, and customer support. A few options stand out for sourcing talent.

1) Popular job boards in Nigeria

Nigerian professionals tend to use a mix of local and international platforms when job hunting. The most active ones include:

• Jobberman 
• MyJobMag
• Indeed Nigeria
• LinkedIn
• HotNigerianJobs

2) Local recruitment agencies

If you’re hiring for specialized or senior roles, local recruiters add a lot of value. They know the salary benchmarks, cultural expectations, and where the best candidates tend to look. Agencies can also handle initial screening, which is helpful when you’re managing the hiring process in Nigeria remotely from another country.

However, recruitment agencies charge a higher fee, typically a good percentage of the employee’s salary.

3) EOR-assisted recruitment

An EOR typically may or may not source candidates for you, but they support once you’ve identified the suitable people as per your requirements. That means drafting a compliant contract, registering the employee for benefits, and running payroll. 

Companies already hiring in South Africa or using an EOR in Ghana will find the Nigerian process follows a similar pattern.

Onboarding employees in Nigeria

A solid onboarding process in Nigeria covers both legal requirements and practical logistics:

• Run a background check on the new hire
• Send a written offer of employment
• Prepare a locally compliant employment contract
• Register the employee for pension contributions and health insurance
• Set up PAYE (Pay-As-You-Earn) tax withholding
• Configure work accounts, ship any devices if needed
• Plan a first-day orientation, even if the role is remote

Key employment laws and requirements in Nigeria

Nigeria’s labor laws are spread across several statutes. The Labor Act covers manual and clerical workers, while higher-level professionals are primarily governed by their employment contracts. Below are the areas that matter most when you hire employees in Nigeria.

Employment contracts

Both fixed-term and open-ended contracts are valid under Nigerian law. 

A standard employment contract in Nigeria should cover:

• Details of both parties 
• Job title & employee duties 
• Detailed working hours, rest days, and leave entitlements
• Salary and its components (in Nigerian Naira, NGN)

Leave and benefits

Nigerian labor law sets minimum entitlements across several categories:

• Annual leave: 21 days after 12 months of continuous service. Employees can carry over up to 12 days, but they must use all accrued leave within 24 months.
• Sick leave: 12 days per year with a medical certificate from a registered practitioner. Beyond 12 days, employees may be eligible for long-term disability benefits, paid by the employer’s insurance company.
• Health insurance: Both public and private health coverage are mandatory benefits to extend to all your employees.
• Maternity leave: Up to 12 weeks minimum. Employees who’ve worked six months or more receive full pay during the first four weeks and at least 50% of their regular salary during the remaining 8 weeks.
• Paternity leave: No universal statutory requirement exists. 

Employers extend roughly 10% of the annual salary (of USD 60,000) in total contributions. You can run specific numbers through our employee cost calculator.

Working hours and public holidays

The standard workweek is eight hours a day, extending up to 40 hours a week. Overtime exists on paper but isn’t widely practiced. However, when it applies, the rate must be spelled out in the contract. 

Nigeria recognizes around 13 public holidays each year, including: 

• New Year’s Day, Workers’ Day
• Democracy Day 
• Independence Day 
• Christmas, and 
• Several Islamic observances whose dates shift with the lunar calendar

Tax obligations

The national minimum wage sits at ₦70,000/month. You are responsible for withholding any taxable income above the minimum wage. The progressive tax rates range from 7% to 24% of the total taxable income.

Further, you must remit the deducted personal income tax to the state or federal revenue authority. Getting this wrong can result in interest, penalties, or even audit triggers.

Beyond income tax, employers contribute to pensions, health insurance (NHIS), and the Employees’ Compensation Scheme. 

Termination and notice periods

You must terminate any employment contract on valid grounds, which requires case-by-case considerations. 

Without them, it can be treated as unfair dismissal and end up at the National Industrial Court of Nigeria (NICN), the court with exclusive jurisdiction over employment disputes.

You may ask for notice periods upon termination, depending on employees’ tenure:

• Under three months of service: One day
• Three months to two years: One week
• Two to five years: Two weeks
• Over five years: One month

Furthermore, there’s no statutory severance pay in Nigeria. Moreover, end-of-service gratuities are typically negotiated into the employment contract or a collective bargaining agreement. 

Given the complexity involved, it’s best to work with modern HR solutions offering workforce management in Nigeria or local counsel before initiating any termination.

Explore Payoneer Workforce Management in Nigeria

Between PAYE filings, pension registration, health insurance enrollment, and contract drafting, the administrative side of hiring in Nigeria adds up fast, especially if you don’t have a local HR team or legal entity.

Payoneer Workforce Management can help streamline your administrative burdens. As an EOR, we act as the legal employer and assist with:

• Drafting and managing locally compliant employment contracts
• Processing accurate, timely payroll 
• Handling tax withholding and statutory contributions
• Administering health insurance, pensions, and other benefits

The same platform works across 160+ countries, so if you’re also looking at South Africa or Ghana, everything is managed through one dashboard. 

You can also manage independent contractors in Nigeria using our Agent of Record solution.

Book a demo today to see how Payoneer Workforce Management can simplify your expansion into Nigeria.