Employment laws in Nigeria
Covers labor law compliance in Nigeria, notice periods, and statutory rights for employers & how EORs like Payoneer Workforce Management can help.
The employment laws in Nigeria are governed by the Labor Act of 2004. It covers minimum wage (₦70,000/month), standard working hours (40 hours per week), contracts, and notice period.
Foreign employers must also consider that Nigeria does not have one employment code. You are looking at the Labor Act, the Constitution, the Pension Reform Act, the Employees’ Compensation Act, specific state laws, and more, all running side by side.
That is why, typically, employers look to partner with an Employer of Record (EOR) like Payoneer Workforce Management for support to navigate the compliance requirements.
This article explains key employment laws in Nigeria to ensure compliance when engaging local talent.
Key employment laws in Nigeria
The following legislation matters when you’re thinking about labor laws in Nigeria:
- The Labor Act, Chapter L1, Laws of the Federation of Nigeria (“LFN”) 2004, handles day-to-day employment rules. It includes contracts, wages, working conditions, leave, and termination.
- The 1999 Constitution (as amended) bans workplace discrimination. It also established the National Industrial Court (NICN) to resolve labor disputes.
- The Pension Reform Act of 2014 makes retirement savings mandatory.
- Employees’ Compensation Act 2010 requires a payroll contribution to the Nigeria Social Insurance Trust Fund (NSITF). It covers workplace injuries, occupational diseases, and disabilities.
- The National Health Insurance Authority (NHIA) Act 2022 kicked in mandatory health insurance for employers.
Contract employment laws in Nigeria
The employment contract in Nigeria states the work requirements and protects employees from unfair termination.
Types of contracts
- Indefinite-term: This is the default with no end date. It becomes a rulebook for pay, leave, notice, and termination.
- Fixed-term: It is set for a pre-determined period and lapses thereafter. You are not obliged to extend any notice period unless the contract says otherwise.
Essential contract terms
You must hand over written terms before someone starts working. The document needs to spell out the following:
- Names and addresses of both parties
- Job description
- Start date and working hours
- Wage rate and its components
- Pay frequency
- Leave entitlement and termination procedures
Minimum wage in Nigeria
The current national minimum wage is ₦70,000 per month.
To get a sense of total employment costs in Nigeria, try the employee cost calculator.
Working hours in Nigeria
The standard work week in Nigeria is 40 hours. You can schedule daily working hours in Nigeria at eight hours, between Monday and Friday.
Overtime laws in Nigeria
There is no statutory overtime rate. Instead, overtime pay and limits get negotiated in the contract or through collective bargaining.
That’s different from South Africa and Kenya, where the statute recommends the rate at one and a half times the regular wage on weekdays and two times the regular wage on rest days.
Mandatory benefits
On top of salary, you have to extend several statutory contributions:
- Pension – The employer contributes 10% of the employee’s gross salary, and the employee contributes 8%. Both portions flow into a Retirement Savings Account under Nigeria’s Contributory Pension Scheme.
- Health insurance (NHIS) – These funds provide access to healthcare through registered Health Maintenance Organizations.
- Social insurance (NSITF) – This is an employer-only plan that typically provides cover for employees against work-related injuries, disability, and death.
Cumulatively, your contributions add roughly 10% on top of gross salary (benchmark USD 60,000). The exact number depends on how the salary is structured.
Furthermore, labor law compliance in Nigeria also includes extending the following leave entitlements:
- Annual leave: 21 paid days after 12 months on the job.
- Sick leave: 12 days of sick leave per year (may ask for a doctor’s note).
- Maternity leave: Can go up to 12 weeks at 50% pay, provided the employee has been working continuously for six months or more. There is no federal paternity leave law, though the public sector gets 14 days.
Check out the full breakdown in our Nigeria leave policy guide.
Termination
The termination laws in Nigeria stipulate that you follow the contractual notice period and pay out what’s owed (unused leave, accrued salary, and any contractual severance). Moreover, the labor courts may take the matter seriously if due process is not followed.
Notice period in Nigeria
The Labor Act lays out the minimum notice based on tenure:
| How Long They’ve Worked | Minimum Notice |
|---|---|
| Three months or less | One day |
| Over three months, up to two years | One week |
| Over two years, up to five years | Two weeks |
| More than five years | One month |
Severance pay in Nigeria
There’s no statutory severance for a regular termination.
Navigate employment laws in Nigeria with trusted support
The worker and non-worker split, overlapping statutes, and state-wise compliance take more than a template, especially without local HR on the ground.
Payoneer Workforce Management steps in as your Employer of Record. We support the legal employment relationship while you keep operational control.
We help you with:
- Employment contracts drafted under Nigerian law
- Calculate and remit health and social insurance contributions
- Payroll with tax withholding
- Terminations handled within notice and severance rules
- Navigating compliance requirements
For teams working with contractors, check the Agent of Record path or the contractor management system.
Talk to an expert to see how Payoneer Workforce Management can simplify employment laws in Nigeria for you.
Frequently asked questions (FAQs)
No, it typically covers only “workers,” meaning manual and clerical staff. The Labor Act specifically carves out managers, executives, and professionals. If you’re engaging someone in one of those roles, the employment contract becomes your rulebook.
The notice period depends on tenure. It could be one day, if under three months. One week to up to two years. Two weeks to up to five years. One month after that. Senior contracts almost always set a longer window.
Typically, the law does not require severance for a standard termination. If it’s not in the contract, it’s not owed.
Yes. As your EOR, Payoneer Workforce Management helps navigate the formation of compliant contracts, run payroll in Naira, manage every statutory contribution, and process terminations properly. All this is possible without you setting up any local entity.
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- Let Payoneer Workforce Management manage benefits, work permits, timesheets, and more so you don’t have to
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