Employer of Record in Nigeria

Hiring independent contractors has boomed in popularity because of the cost savings and flexibility they offer. It can be a great option if you require niche skills or short-term project support. Contractors allow businesses to access specialized skills quickly, without the time and cost of setting up a local entity.

However, it’s important to know the limits of this model: contractors are not a substitute for full-time employees. Relying on them for ongoing, long-term roles can create serious compliance risks, including employee misclassification, which can lead to fines, back taxes, and reputational damage.

Playroll’s contractor management solutions make it simple to compliantly engage, onboard, and pay contractors around the world. We provide clear visibility into agreements, streamline payments, and reduce compliance risks – so you can focus on getting the work done. And when you’re ready to take the next step, we can help seamlessly convert contractors into full-time employees through our global Employer of Record service.

Businesses can only operate smoothly in Nigeria if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in Nigeria below, to avoid any compliance issues.

Employment Contract Requirements

In Nigeria, it is mandatory for both employer and employee to sign a written employment agreement. To be legally compliant, employment agreements must include the following information:

• Names of the employer and employee
• Employees address
• Position title and description of work
• Beginning date of employment
• End date of employment, for a fixed-term contract
• Notice period for termination
• Salary, including frequency of payment
• Work hours
• Leave pay and conditions for incapacity due to illness or injury
• Any special conditions

Onboarding Process

We can help you get a new employee started in Nigeria quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations.

For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Probation Period in Nigeria

The probation period in Nigeria is typically 3 to 6 months. However, there is no specific legal requirement for a probation period in Nigeria. The length of the probation period is usually specified in the employee's employment contract.

Nigerian working hour regulations offer considerable flexibility, with standard hours typically set at 8 hours daily and 40-48 hours weekly. The Labour Act does not specify general working hours rather these are fixed by the mutual agreement or collective bargaining within the enterprise or industry. In typical working arrangements, Monday through Friday, the hours are 8:00 AM to 5:00 PM, with a one-hour break for lunch.

In Nigeria, overtime generally refers to any work performed beyond the standard working hours established in an employment contract or collective agreement. Common practice in Nigeria typically follows these compensation structures:

• Time and a quarter (1.25 times the normal hourly rate) for overtime worked on regular working days. This means an employee earning ₦1,000 per hour would receive ₦1,250 per overtime hour.
 
• Time and a half (1.5 times the normal hourly rate) for work performed on rest days or public holidays. Using the same example, an employee would earn ₦1,500 per hour when working on these days.

Global expansion shouldn't mean losing time to paperwork or dealing with complicated, country-specific HR systems. An Employer of Record helps you keep your focus on talent by handling the operational side of employment in Nigeria. That includes onboarding, contract management, payroll processing, and statutory compliance, all aligned with local laws and best practices. The EOR guarantees that employees are legally employed and properly supported from day one.

This streamlined setup allows you to prioritize recruiting the best people and integrating them into your company culture. Your team stays lean, and you avoid getting caught up in the details of local processes or shifting regulations. For founders, global hiring managers, or HR teams working across borders, an EOR multiplies your impact, reducing admin time, preventing errors, and helping ensure that new hires have a smooth experience from the get-go.

Managing payroll taxes in Nigeria requires careful attention to multiple statutory obligations, including PAYE tax (7-24% progressive rates), pension contributions (10% employer, 8% employee), NHIS (10% employer, 5% employee), NHF (2.5%), ITF (1%), and NSITF (1%). Employers must register with various government agencies, maintain accurate employee records, and adhere to strict submission deadlines that vary by tax type—ranging from 7 days after salary payment for pension contributions to the 16th of the following month for NSITF.

Non-compliance can result in significant penalties, including percentage-based fines and interest charges. Using payroll management software like Playroll can help employers consolidate payroll data, automate complex calculations, ensure accurate statutory deductions, and maintain compliance with Nigeria's frequently updated tax regulations, ultimately reducing the risk of costly errors and penalties.

Hiring in Nigeria means taking on local payroll obligations, which often include unique tax rates, contribution rules, and strict documentation. If you're not familiar with the system, or don't have a local entity, it’s easy to make mistakes. That’s where an Employer of Record ccomes in. The EOR manages payroll for your team on your behalf, ensuring every process is accurate, timely, and legally compliant.

Key Ways an EOR Supports Payroll in Nigeria:

• Full Legal Compliance: Ensures all payments, deductions, and filings meet country-specific requirements.
• Payroll Setup & Processing: Handles salary calculations, tax withholdings, and local reporting obligations.
• Statutory Benefit Contributions: Pays into required social programs and manages country-mandated benefits.
• Employee Documentation: Generates compliant contracts and manages hiring and termination paperwork.
• Local Currency Payouts: Delivers salaries in local currency, avoiding delays or exchange rate issues for employees.

In Nigeria, work permits and visas are essential for employers hiring foreign workers or relocating employees to the country. The main work permits available include the Temporary Work Permit (TWP), which is for short-term assignments, the Expatriate Quota Work Permit for specialized and senior roles requiring government approval, and the Combined Expatriate Resident Permit and Aliens Card (CERPAC), which combines work and residence authorization for long-term expatriates.

Employers must comply with regulations such as securing expatriate quota approvals for certain positions and ensuring that work permits are renewed on time to maintain legal compliance. As of May 2025, Nigeria has implemented significant reforms to its expatriate administration and visa regime, including the introduction of a fully digital Expatriate Quota Application Portal (EQAP) for all new and renewal applications.

Mandatory Leave Entitlement in Nigeria

The annual leave entitlement in Nigeria is 21 - 28 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In Nigeria

Nigeria has 11 public holidays in a calendar year, which are not included in the minimum paid leave entitlement and are taken in addition to annual leave. The following are national holidays in Nigeria:

Paid Time Off in Nigeria

Nigerian workers are entitled to annual leave of at least six working days with full salary, subject to the following details:

• The annual leave is increased to at least twelve working days for young workers (under sixteen) including apprentices.
• A worker must have worked for at least twelve months in order to qualify for annual leave

Maternity Leave In Nigeria

Maternity leave is provided under the Nigerian Labor Act. Provided that employees have worked for at least six months with their employer, they are entitled to six weeks before childbirth and six weeks afterwards. Additional details relating to Maternity Benefits in Nigeria include:

Paternity Leave In Nigeria

In 2021 the Federal Executive Council approved a paternity leave of 14 days for employees in the public sector. Paternity leave pay is negotiated in an employment contract.

Sick Leave In Nigeria

Nigerian employees are entitled to 12 days of paid sick leave. Employees may need to provide a medical certificate from a registered medical practitioner.

Parental Leave In Nigeria

Nigeria does not have a separate shared parental leave policy.

Bereavement Leave

Employees are entitled to three days of paid bereavement leave in the event of the death of a spouse, child, parent, sibling, or parent-in-law.

Study Leave

Employees may be entitled to paid or unpaid study leave, depending on their contract of employment

When hiring across multiple countries, maintaining consistency in how you deliver employee benefits quickly gets tricky. Each country, including Nigeria, has its own legal rules, cultural norms, and contribution systems. An Employer of Record helps you strike the right balance between global structure and local compliance. They take over the complexity of delivering benefits that are aligned with Nigeria’s legal requirements and competitive with local market expectations.

From ensuring statutory benefits are in place to managing local onboarding timelines and enrollment systems, the EOR provides a seamless experience for both employer and employee. This makes it easier to grow your team across borders without reinventing your benefits process in each new location. You stay in control of your overall benefits strategy, while the EOR takes care of executing it in a way that works legally and culturally in Nigeria. It’s a smarter way to scale benefits globally without losing local relevance.

Termination Process in Nigeria

The termination process in Nigeria is governed by the Labour Act and the National Industrial Court Act. Under these laws, employers have the right to terminate employment contracts at any time, but they must give employees notice of termination or pay them salary in lieu of notice.

Notice Period in Nigeria

The notice period required depends on the employee's length of service, as follows:

1. Up to 3 months: 1 day
2. Up to 2 years: 1 week
3. Up to 5 years: 2 weeks
4. Up to 10 years: 1 month
5. More than 10 years: 6 weeks.

Severance in Nigeria

Severance pay in Nigeria is not mandatory by law, but it is often part of an agreement between the employer and employee, or is provided under sectoral (branch) collective agreements. The amount of severance pay paid to an employee typically depends on their length of service and last salary. There are two main types of severance pay in Nigeria:

1. Redundancy pay: This is paid to employees who are laid off due to redundancy.
2. Terminal benefit: This is paid to employees who are terminated for any other reason, such as poor performance, misconduct, or retirement.