- Overview: Nigeria
- Global HR Compliance
- Global PEO and payroll
- Work permit for hiring expats via PEO
- Expand without a company set up
- Contractor vs. employee: which is better?
Global HR Compliance in Nigeria
If you hire international workforce, or plan to hire, then Hiring and Firing Workforce in Nigeria Guide below will help you understand the nuances of labor legislation in the country.
Companies hire international workforce for various reasons but in most cases they are:
- entering the foreign markets to sell company products. To do so, the company hires sales representatives who would represent their product and sell it to their local client base.
- hiring a global talent with unique skills that is unavailable in the local market or costs the company less than the talent with similar skills hired in the home country.
Before entering a certain foreign market or engaging a global talent, it is crucial for the company to understand how it can make local hires and reward its workers on a monthly basis. Growing companies often face a challenge of paying benefits and bonuses to the commission-based independent sales representatives they are working with.
If you intend to hire and pay your foreign workforce in full compliance with labor laws and regulations of Nigeria, then the Global Employer of Record service from Acumen International may be the best way for you to go. We are an International PEO company and we specialize in global employment, meaning we can employ your employees in Nigeria and act as their legal employer on your behalf. We will payroll your foreign workforce monthly and provide benefits to them through our global network so you don’t have to set up your own legal entities there.
We are experts in global workforce employment in , and our goal is to become your single provider. Instead of working with numerous local staffing agencies and legal advisors, Acumen International can solve your global business challenges and save you time, costs, and resources.
Our team of English-speaking professionals frees you from working through language nuances. Acumen International works 24/7 and can assist you whenever you need, regardless of time zones. Our goal is to create tailored labor solutions for you that are managed legally and in full compliance with the local employment laws.
With our knowledge and deep understanding of local nuances, you easily satisfy your need for skilled professionals in your global industry. With our qualified local partners, you can trust that your global workforce satisfies all local tax, social security, and immigration requirements in Nigeria.
See the guide below for a general overview of labor rules and regulations in Nigeria or contact us if you need to employ workers in Nigeria or would like to get more details.
Hiring and Firing Workforce in Nigeria Guide
# Employment Agreements
Permanent employment contracts
The employment contract must include the following information:
- The name of the employer or group of employers, or of the undertaking by which the worker is employed (where relevant).
- The name and address of the employee and the place and date of their engagement.
- The nature of the employment.
- If the contract is for a fixed term, the date when the contract expires.
- The period of notice to be given by a party wishing to terminate the contract.
- The rates of wages, their method of calculation, and the manner and periodicity of payment of wages.
- Any terms and conditions relating to: working hours, holiday and holiday pay, incapacity to work due to sickness or injury, including any provisions for sick pay, any special conditions of the contract.
The duration of a fixed term contract is usually stated in the contract of employment. There is no limit to the duration of a fixed term contract. However, where the employee continues to provide services to the employer after the contract expires, which the employer acknowledges, it can be deemed that a new fixed term contract has started. Alternatively, the employee can be deemed to be a permanent employee. Fixed term employees accrue employment rights in the same way as permanent employees. It is easier and cheaper to terminate a fixed term contract, as it automatically terminates at the end of the period specified without any need to give notice.
Collective agreements with trade unions or employee representatives are voluntary agreements and are not binding on employers, unless the terms of a collective agreement are expressly incorporated into a contract of employment.
#Employment Termination and Severance Pay (Dismissal)
Either party to a contract of employment may terminate the contract on the expiration of notice given by him to the other party of his intention to do so. Generally, an employer has the right to terminate the employment of an employee. However, by virtue of a recent decision of the National Industrial Court in Nigeria, an employer has a duty to state the reason for the termination. With respect to dismissal, an employer has the right to dismiss an employee when the conduct of the employee is of a serious and weighty nature. This would include offences with a criminal element, such as fraud, assault and sexual harassment. Other offences include dereliction of duty and gross insubordination. Where an employer dismisses an employee, the employer is duty bound to justify the dismissal from employment and establish that the requisite investigation procedure was adhered to. Contrary to the earlier position, which provides for an automatic forfeiture of all entitlements due to the employee in the event of dismissal, the current legal position is that all earnings of an employee prior to the dismissal must be paid by the employer to such an employee. The rule that a dismissed employee is not entitled to such earnings is largely no longer practiced law.
#It is prohibited to dismiss
An employee cannot be dismissed in any of the following circumstances:
- The reason given for the dismissal is unfair.
- The dismissal amounts to discrimination.
- The employee is dismissed for: whistleblowing, joining a trade union, or being a part-time employee
Specific categories of protected employees include:
- Public servants whose employment is provided for in a statute.
- Public servants in the civil service.
- Employees hired under a contract of employment.
Notice periods to be given by employees and employers are as follows:
- Where the employee has been employed for less than three months, either party can terminate the contract by giving a minimum one-day notice.
- Where the employee has been employed for three months but less than two years, either party can terminate the contract by giving a minimum one-week notice.
- Where the employee has been employed for two years but less than five years, either party can terminate the contract by giving a minimum two-week notice.
- Where the employee has been employed for five years or more, either party can terminate the contract by giving a minimum one-month notice.
Severance pay is often regulated by the contract of employment and sectoral collective agreements. Severance pay is generally calculated based on the worker’s length of service and last salary. There is no general statutory severance pay, although the Minister of Labour can enact regulations providing for severance pay to redundant workers.
#Employee Benefits and Contributions
Group life insurance policy
it is mandatory for an employer to procure at its own cost a group life insurance policy in favour of each employee for a minimum of three times the annual total emolument of the employee.
The Labour Act makes it mandatory for an employer to either provide free transportation or an allowance in lieu where a clerical, manual or unskilled employee is required to travel 16km or more from his or her normal place of work to another worksite. If the employer provides a vehicle or vessel for this purpose, it must ensure that it is suitable, in good sanitary condition and not overcrowded.
Health, safety and occupational hazards
Employees’ Compensation Scheme is essentially an insurance for occupational injuries and illnesses for all employees. It is a scheme based on an employees’ compensation fund and is administered by the Nigeria Social Insurance Trust Fund. The ECA provides compensation for employees who sustain injuries or disabilities because of an accident, or contract an occupational disease, in the course of employment, whether at their usual place of work or elsewhere. Accidents include those sustained on the way between the place of work and the employee’s home or the place where the employee usually takes meals or receives remuneration.
The Labour Act provides that an employer who has a minimum of 10 employees may, together with every person in his or her employment, pay contributions under the National Health Insurance Scheme. This provision is not mandatory, but is suggested in legislation. In practice, employer health contributions may be necessary to obtain certain permits and approvals in some industries. For employees outside the scope of the Labour Act, there are no mandatory rules, conventions or implied (by judicial decision, convention or practice) terms of contract to provide any medical insurance to employees. However, some employers provide this to be considered employee-friendly and upscale
There are no provisions for probationary periods under the Labour Act and, as such, where they are in operation, they are stipulated under the relevant contract of employment. The Supreme Court of Nigeria has upheld the validity of probationary periods.
Although the Labour Act does not specify general working hours, an employer may resolve to create rules on overtime and pay for overtime either by mutual agreement with each employee or via collectively bargaining with all employees within the establishment. An employer, in formulating overtime policies, should take into consideration that the general understanding is that full-time hours in Nigeria amount to 40 hours per week. Anything in excess of the fixed normal working hours, which the employee agrees to be bound by, will generally be considered to be overtime. It is germane to state that there are no statutory provisions on the overtime work limit and overtime pay. Overtime compensation is entirely a matter of mutual agreement (employment contract), a collective bargaining agreement or an order by the industrial wages board. What many employers do is to state expressly in each employee’s contract of employment (especially for skilled, professional and managerial employees) that payment for overtime is deemed to have already been factored into their salaries or financial benefits. Nigerian law, inasmuch as it does not stipulate payment of overtime pay, also does not stipulate the categories of workers for which this is applicable.
Normal working hours can be fixed by any of the following:
- Collective bargaining agreement within the organisation or industry concerned.
- An industrial wages board, where there is no collective bargaining procedure available.
- Mutual agreement
The Labour Act provides for mandatory annual leave. The Labour Act provides that every employee shall be entitled to an annual holiday with full pay for a minimum of six working days after 12 continuous months of service. For employees outside the scope of the Labour Act (skilled workers), there is no statutory provision regulating annual leave, but the norm is 15 to 20 working days during each 12 months of service, usually with pay.
The Labour Act provides that workers are entitled to a maximum of 12 working days of paid sick leave. The affected employee must, however, furnish the employer with a doctor’s report, certified by a registered medical practitioner. Sick leave is fully paid leave and is calculated as the worker’s basic wage exclusive of overtime pay and other allowances. For employees outside the scope of the Labour Act, the contract of employment (together with the employee manual or handbook and other judicial decisions) determine sick leave. Conventionally, the practice is that such employees are entitled to nine to 12 weeks of sick leave and, in many cases, bereavement leave of up to one week and other compassionate leave, which may range from one to two weeks. Each employer generally sets its own rules but typically adopts the Labour Act as a minimum and exceeds it depending on how employee-friendly the employer wants to be regarded.
A pregnant employee is entitled to 12 weeks’ maternity leave if she provides a written medical certificate from a medical doctor stating that she should not or cannot work. Pregnant employees are entitled to at least 50% of their normal wages, provided that they have been employed for at least six months. Nursing mothers are allowed half an hour twice a day to attend to their babies.
The Labour Act does not contain provisions on paternity leave. However, in Lagos State, civil servants are entitled to ten days’ paternity leave within the first two months from the birth of the baby.
Acumen International can help you fast-track your possibilities of entering and expanding your business in Nigeria by providing you with our Employer of Record services. Our unique mix of PEO/EOR solutions will enable you to jumpstart your global operations almost immediately, cost-effectively and compliantly without any need to set up a legal entity first or afterwards.