Employer of Record in Nigeria

How an Employer of Record works in Nigeria

An Employer of Record (EOR) in Nigeria makes it easy for foreign companies to hire in the country without the need to set up a local entity. The EOR takes over the role of the legal employer, hiring employees on behalf of the foreign company and taking care of onboarding, compliance, and managing the employment relationship.

Rivermate provides EOR services in Nigeria, making the entire process straightforward for your company. When you work with us, you can hire quickly and compliantly in the country while focusing on managing your business.

Nigeria labor market: At a glance

The hiring market
Greatest hiring activity:	Lagos, Abuja, and Port Harcourt.
Hiring timelines:	1–2 weeks for local employees; 2–3 months for foreign nationals.
In-demand sectors:	Tech, fintech, banking, NGOs, media, oil & gas.
Sectors with skills shortages:	Healthcare

The salary market
Employer tax contributions:	Roughly 12–22%.
Minimum wage:	NGN 70,000 per month.
Average gross annual salary:	Varies widely by sector and location.
Income tax brackets:	Up to NGN 800,000: 0% NGN 800,001–3,000,000: 15% NGN 3,000,001–12,000,000: 18% NGN 12,000,001–25,000,000: 21% NGN 25,000,001–50,000,000: 23% Above 50,000,000: 25%

What it costs to hire an employee in Nigeria

The total cost of hiring in Nigeria is affected by a few different factors. Here are the main ones to take into account when working out the costs.

Salary

Salaries are not regulated in Nigeria, so there’s no official average salary. Instead, they tend to vary considerably based on the size of the company and the employee’s personal experience level. Wages in major cities like Lagos and Abuja, the capital, are higher, reflecting the higher cost of living.

Minimum wage

The statutory minimum wage in Nigeria is currently set at NGN 70,000 per month. Where small businesses have fewer than 25 employees, they are exempt from paying this.

Employer contributions

There are several employer contributions to be aware of. First of all, the salary is usually divided into base pay, housing allowance, and transport allowance, and this is known as the emolument bundle. The pension contribution, which is 10% for the employer and 8% for the employee, is calculated based on this emolument bundle.

Employers also contribute 1% of annual payroll to the Industrial Training Fund (ITF). However, this only comes into effect when the business has 25 employees or more and operates outside of a free-trade zone. Employers also pay 1% of monthly payroll to the Employee’s Compensation Fund (NSITF), which covers workplace injuries.

Health insurance is also paid to the National Health Insurance Authority (NHIA). Where a private business has five or more employees, health insurance is a flat-rate contribution of NGN 160,000. But when a salary is above NGN 250,000, health insurance is 15% of basic monthly salary. In this case 10% is contributed by the employer and 5% by the employee.

National Housing Fund (NHF) contribution is 2.5%. This is mandatory for public-sector employees but not for private-sector employees.

Income tax

Income tax is calculated in progressive brackets. A tax-free threshold applies up to NGN 800,000 per year, and the maximum rate is 25% for salaries above NGN 50,000,000.

Paid leave

Employees are entitled to paid annual leave in Nigeria. Every year, they receive a minimum of six days’ paid leave as long as they have been working in the role for at least 12 months.

Sick leave is paid up to 12 days per year. Maternity leave is 12 weeks paid at 50% of their regular salary in the private sector, but only after six months’ service.

Overtime

The working week is typically 40–48 hours. Overtime rates are often paid at a 25% premium for normal weekdays and 50% for rest days or public holidays, but this is not a legal requirement and will be stated in the employment contract.

Visas and work permits

If hiring foreign employees, you will need to take into consideration the additional costs, which can be quite high. This includes the Expatriate Quota, which costs about NGN 300,000 for each position, and the CERPAC residence permit. This is currently USD 2,000 per year, plus a mandatory insurance charge of USD 1,000 and additional administrative fees.

Common employee benefits

Non-mandatory benefits include meal and wardrobe allowances on top of basic pay. A quarterly bonus or 13th-month bonus is very common, and private health insurance is also a common bonus offered to employees.

Employer cost calculator in Nigeria

Our employer cost calculator will provide you with an accurate idea of employment costs in Nigeria.

What it’s really like to hire in Nigeria

Market condition	What an employer needs to know
Talent availability	High. Lots of skilled professionals, and local talent is highly educated.
Top-paying sectors	Oil & gas, international NGOs, fintech.
Skills shortages	Healthcare sector.
Key employer challenge	Inflation and currency volatility.

When hiring in Nigeria, you’ll find a high availability of talent. There are lots of educated professionals in Nigeria who are not only highly skilled but hardworking. As such, you should find it relatively straightforward to fill local roles in major sectors like tech, finance, and media.

Lagos is the main economic hub of the country and Nigeria’s commercial center. It’s the primary hub for tech startups, and major industries here include banking, media, and fintech, which is growing fast in the country. Many larger companies in these industries base their headquarters in the city.

Abuja is the capital of Nigeria and the political center. It’s also the main hub for NGOs and non-profits. Living costs in both Abuja and Lagos are higher than elsewhere, and wages are also higher in the cities.

The highest-paying sectors are finance, NGOs, and oil and gas. Port Harcourt is the center of the oil and gas sector. Our local expert says that these roles in larger companies can pay as much as 400% more than those offered by small local businesses.

While there is a lot of talent available, you should be aware of “Japa syndrome.” This applies to the primary skill shortage in healthcare, especially doctors and nurses, who leave the country to seek better wages elsewhere. While the main issue is in healthcare, other industries like tech are also affected.

Contracts and payroll calculations must be made in Nigerian naira (NGN), the local currency. This is often a bit of a gray area, and many candidates may prefer to receive their pay in USD because of the volatility of the naira, but this is not strictly permitted.

Onboarding is relatively straightforward and typically takes 1–2 weeks for a local hire. For a foreign worker, the process is longer, taking 4–6 weeks for quota approval, 1–3 weeks for the STR visa, and then the application to CERPAC. This typically takes 2–3 months in total.

Remote work has become more important for employees in Nigeria in recent years. Candidates often ask about it in interviews, and some version of hybrid or remote work is considered important. In fact, an on-site mandate could be a deal-breaker when it comes to hiring top talent.

Country-specific problem that employers must know about

One of the main problems employers face in Nigeria is the volatility of the local currency. High inflation and constant devaluation mean this has long been a problem in Nigeria, and foreign employers may not be used to it.

The law states that salaries and taxes must be paid in Naira, but employees often want to negotiate wages in USD to enjoy greater stability. It’s a gray area, and it can cause problems, especially if you have employees who can’t understand why they can’t be paid in the currency of their choice.

As an employer, it’s important to stick to the rules. Our local experts have dealt with these situations before, including one case where employees had to go back from being paid in USD to naira, so it’s an area where we have considerable experience and can help you avoid potentially serious problems.

Main compliance risks to be aware of in Nigeria

Hiring foreign employees

The process around hiring foreigners is not straightforward in Nigeria, and it can cause problems for employers who are new to hiring in the country. First, you will need to apply for the Expatriate Quota, which must be approved by the Ministry of Interior. You must justify why you need it, providing details of the job description and evidence that local talent is not available for the role.

Next, the employee will need a Subject to Regularization (STR) visa, followed by the Combined Expatriate Residence Permit and Aliens Card (CERPAC), before they are able to work.

On top of that, two Nigerian understudies must also train alongside the foreign employee, and you must submit a training plan showing how they will later be able to carry out the role. Quotas are renewed every three years, and you must provide evidence showing the local transfer of skills in order to reapply.

Personal income tax reform

In January 2026, updated tax bands came into effect in Nigeria. As such, there is a risk to employers of using outdated brackets by accident, leading to mistakes with PAYE. Local auditors are very strict, and such mistakes can often lead to large fines.

Problems with termination

If you want to terminate a role because of poor performance, you need to document it very carefully, which could involve carrying out a performance improvement plan (PIP). You can’t just terminate, and you must show your efforts to help the employee improve, otherwise you could be on the receiving end of wrongful dismissal claims and penalties.

Mandatory contributions

There are several statutory payments that you must make as an employer, including the pension, Industrial Training Fund, NSITF, and NHIA. Government auditors regularly carry out in-person checks to make sure everything is in order, and mistakes can lead to penalties or even legal action.

Hiring contractors

While you can hire contractors in Nigeria, misclassifying employees as contractors can be serious. If they are actually operating as employees, whether you knew this or not, you can become liable for past taxes and pension contributions, and you might also face fines.

How Rivermate can help you stay compliant when hiring in Nigeria

Rivermate’s expertise in local labor laws means we can take care of hiring in Nigeria while ensuring compliance. You can focus your efforts on your business, while we’ll take care of the rest.

Learn more about EOR services

Benefits of hiring employees through an EOR in Nigeria

When you use an EOR instead of establishing a local entity, you can avoid the risks that come with making compliance mistakes. Rules are not always straightforward, and they can change, but an EOR like Rivermate will stay up to date with all the changes to ensure the rules are followed.

An EOR can arrange everything from making sure terminations are compliant to managing foreign worker quotas. Because audits are quite regular and can be very strict in Nigeria, using an EOR that has a detailed understanding of the rules and processes will help you avoid problems.

Setting up a local company can also be expensive, and there are a lot of administrative tasks that can take up your time. By using an EOR, you could start hiring in just a couple of weeks, compared to months if you set up an entity in the country.

Want to start hiring in Nigeria?

Hiring in Nigeria doesn’t end at finding the right candidate. At Rivermate, we make the entire process simple for foreign companies by managing payroll and ensuring compliance, so you can hire with confidence.

Talk to a Nigerian Hiring Expert

Sources:

https://placng.org/i/wp-content/uploads/2024/07/National-Minimum-Wage-Amendment-Bill-2024.pdf

https://taxsummaries.pwc.com/nigeria/individual/taxes-on-personal-income

http://www.nhia.gov.ng/wp-content/uploads/2024/03/NHIA-Act-2022-Gazetted-Copy.pdf

https://cerpac.immigration.gov.ng/about-us

https://ecitibiz.interior.gov.ng/

https://lawsofnigeria.placng.org/laws/L1.pdf