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Global Payroll Team
Written by Global Payroll Team
Last updated May 7, 2026
Expert Reviewed
Payroll in Nigeria
Tax in Nigeria
Immigration in Nigeria

Nigeria map

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Employer of Record/PEO and Payroll Services in Nigeria

Mercans is a leading provider of payroll, PEO (Professional Employer Organization), and HR services in Nigeria. We support businesses with payroll processing, tax compliance, employee administration, and other HR functions so they can expand compliantly and focus on core operations while managing employees effectively in Nigeria.

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Doing Business in Nigeria

Doing business in Nigeria can be both challenging and rewarding. The country has one of Africa’s largest economies and a significant consumer market, but businesses must also navigate local regulatory requirements, tax administration, infrastructure constraints, and sector-specific compliance obligations. A well-structured market-entry plan and strong local compliance support are essential.

Entity Registration and Incorporation Requirements

In Nigeria, entity registration and incorporation generally involve reserving a business name and registering the business with the Corporate Affairs Commission (CAC), together with completing post-incorporation tax and regulatory registrations where required. It is important to ensure compliance with all applicable regulations and licensing requirements before commencing operations.

Banking

Banking hours vary by institution, although many banks operate during standard business hours from Monday to Friday and provide extensive digital banking services.

Working Week

The standard working week is commonly Monday to Friday, although actual hours are usually set by contract, policy, or sector practice.

Labor Law

Labour law in Nigeria governs the relationship between employers and employees, including matters such as wages, leave, contracts, health and safety, and termination of employment. Key rules are found in the Labour Act and related legislation.

Main Industries

Oil and gas, agriculture, telecommunications, financial services, cement, construction and food processing

GDP Growth

3.40%

Dates & Numbers

dd/mm/yyyy

Official State Name

Federal Republic of Nigeria

Population

242.43 million

Capital

Abuja

Major Languages

English

Currency

Nigerian Naira

Internet Domain

.ng

International Dialing Code

+234

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Nigeria
Abuja, NG
10:33 pm, May 16, 2026
24°C
overcast clouds
69 %
Wind Gust: 4 mph
Clouds: 99%
Sunrise: 6:10 am
Sunset: 6:42 pm

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Payroll

Payroll in Nigeria involves calculating employee earnings, withholding Pay-As-You-Earn (PAYE) tax where applicable, administering statutory pension contributions for eligible employees, and complying with local employment, tax, and immigration rules. Employers should also manage payslips, leave, and payroll documentation accurately to support ongoing compliance.

It is acceptable to provide employees with online payslips

Payslip

Employers should maintain payroll, tax and pension records in line with applicable laws

Reports

Employees receive paid annual leave of at least 6 working days after 12 months of continuous service

Annual Leave

Employees may receive up to 12 working days of paid sick leave with medical certification

Sick Leave

At least 12 weeks of maternity leave applies under the Labour Act, while paternity leave is not generally mandated by federal law

Maternity & Paternity Leave

Notice ranges from 1 day to 1 month depending on length of service and how wages are paid

Employee Termination

There are no provisions mandated by law regarding the 13th-month salary

13th-month salary

70,000 NGN per month

Minimum Wage

Overtime payment depends on the employment contract, collective agreement or workplace policy

Overtime

Severance pay is not generally mandated by law, although redundancy may require negotiation of benefits

Severance Pay

PEO Nigeria

Mercans PEO (Professional Employer Organization) services in Nigeria provide a comprehensive HR outsourcing solution for foreign companies to establish a local presence, compliantly hire and manage employees, handle HR, payroll, benefits, tax compliance, and other administrative tasks, while reducing costs and administrative burden.

Through our Nigeria PEO, we provide services that are flexible and cost-effective for companies seeking to outsource their HR and payroll processes. As a Professional Employer Organization, Mercans offers a range of services including employee benefits, payroll administration, and compliance with Nigeria employment laws. By entrusting their HR and payroll needs to Mercans, companies can focus on their core business activities and ensure a smooth and efficient HR operation.

Partnering with our Nigeria PEO presents the fastest and most efficient way to enter the Nigeria market.

Contact us to explore how PEO Nigeria solutions from Mercans can support your seamless expansion!

Benefits of Hiring an Employee through a PEO in Nigeria

Looking to expand your business into Africa’s largest economy? Partnering with a PEO in Nigeria offers a fast, efficient, and compliant way to hire employees without the complexities of establishing a local entity. Here’s how a Nigeria PEO can support your business growth:

Quick Market Entry

A PEO Nigeria allows your business to hire employees and start operations swiftly, often within a matter of days. This eliminates the need to go through the lengthy process of registering a local entity, enabling you to enter the Nigerian market quickly and begin operations without delay.

Compliance with Local Employment Laws

Navigating Nigeria’s labor laws, tax regulations, and compliance requirements can be challenging for foreign companies. A Nigeria PEO ensures that your business adheres to all local labor laws, including employee contracts, tax filings, and social security contributions, helping you avoid costly legal pitfalls.

Cost-Effective Expansion

Establishing a legal presence in Nigeria can involve significant costs and time. A PEO in Nigeria helps you bypass these setup costs by managing all the HR functions, including payroll, benefits, and taxes, allowing you to focus on growing your business in the region.

Minimized Legal and Operational Risks

Employment laws and tax policies in Nigeria can change frequently, and failure to comply can result in penalties or fines. A PEO Nigeria helps mitigate this risk by staying up to date with all regulatory changes and ensuring that your business remains compliant with local laws.

Access to Skilled Local Talent

Nigeria is home to a large and diverse labor force, with expertise in fields such as technology, finance, education, and manufacturing. A PEO in Nigeria connects you with top talent, familiar with the local market, culture, and business environment, which can give your business a competitive edge.

Simplified HR and Payroll Administration

Managing HR functions and payroll for employees in Nigeria can be time-consuming and complex. A Nigeria PEO takes care of all administrative tasks, from calculating salaries to managing employee benefits and ensuring compliance with local employment laws.

Scalable Workforce Solutions

Whether you’re hiring a few employees or planning to grow your team, a PEO Nigeria offers flexible staffing solutions that can scale with your business. This makes it easier to expand your workforce as demand increases, without the burden of setting up new offices or legal entities.

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Tax and Social Security

Tax and social security in Nigeria include employer obligations around PAYE withholding, pension administration for eligible employees, and other statutory remittances where applicable. Employers should also review sector-specific obligations and the tax treatment of employee compensation and benefits.

Tax

The tax system in Nigeria is administered at federal and state level, with employment taxes including Pay-As-You-Earn (PAYE). Employers must register for relevant tax purposes and operate payroll withholding and remittance correctly.

30%

Corporate Income Tax

24%

Personal Income Tax

7.5%

Sales Tax

7.5%

VAT

Social Security

Nigeria does not operate a broad social security system in the same way as many other jurisdictions. For eligible private-sector employees, the main recurring statutory payroll contribution is the contributory pension scheme regulated by the National Pension Commission.

18%

Social Security Rate

10%

Social Security Rate for Employers

8%

Social Security Rate for Employees

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Employment Law

Employment law in Nigeria governs the relationship between employers and employees, including issues such as wages, contracts, leave, working conditions, and termination of employment. Key rules are contained in the Labour Act, alongside pension, workplace safety, and tax legislation.

Employment Agreement

An employment agreement in Nigeria should clearly set out the terms and conditions of employment, including job duties, compensation, benefits, notice, and other applicable policies. Written terms are important to support compliance and reduce disputes.

Working condition

Working hours in Nigeria are often determined by contract, internal policy, and sector practice. Employers should ensure that working time, rest arrangements, and overtime treatment are set out clearly and administered consistently.

Leaves

In general, Nigerian workers are entitled to annual leave, sick leave, maternity leave, and public holidays where applicable. Under the Labour Act, adult workers are entitled to at least 6 working days of annual leave after 12 months of continuous service, and eligible workers may receive up to 12 working days of paid sick leave with medical certification.

Employment termination

Employee termination in Nigeria can occur for a variety of reasons, including misconduct, poor job performance, redundancy, or mutual agreement between the employer and employee. Termination rights and obligations depend on the employment contract, applicable labour rules, and whether statutory notice or redundancy consultation requirements apply.

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1 day to 1 month

Minimum notice period for terminating an employee, depending on service length and pay interval

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Varies annually

Total number of public holidays

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Contract-based

Working hours per week

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Not prescribed

Total number of days for Compassionate & Bereavement Leave

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Immigration

To work in Nigeria as a foreign national, an individual generally requires the appropriate entry visa and residence or work authorization. For expatriates taking up employment, the Combined Expatriate Residence Permit and Aliens Card (CERPAC) is a key residence document used in Nigeria.

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Residency permits

A residence permit is required for many foreign nationals who wish to live and work in Nigeria for an extended period. The specific route depends on the worker’s status, employer sponsorship, expatriate quota position where applicable, and immigration eligibility.

Work Permit Validity

Usually issued for 1 year and renewable, depending on immigration status and approvals

Required Documents

A formal application from the sponsoring employer in Nigeria

A valid passport with sufficient validity

Passport photographs

Relevant immigration approval and supporting corporate documents where applicable

Any additional documents required by the Nigeria Immigration Service for the specific permit route

Compliant, reliable, error-free and touchless payroll in Nigeria

Build the best team and hire top talent compliantly in Nigeria. Get in touch with Nigeria payroll outsourcing & PEO specialists for a free consultation!

This document was prepared for informational purposes only. As local laws & regulations keeps on changing. Please consult your tax & legal advisors as well.
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    FAQs

    What is an Employer of Record (EOR) in Nigeria and how does it work for foreign companies?

    An Employer of Record in Nigeria, provided by Mercans, acts as the legal employer for your workforce in the country. Mercans handles employment contracts, payroll processing, tax withholdings, social contributions and compliance with Nigerian labour law so that your international company can hire employees in Nigeria without establishing a local legal entity.

    Why should businesses use an EOR instead of setting up a legal entity in Nigeria?

    Using Mercans as your EOR in Nigeria eliminates the need to register a company locally, which saves time and cost. It ensures immediate compliance with Nigerian employment and tax regulations, simplifies HR and payroll administration, and allows your business to focus on growth while Mercans manages employment obligations.

    How does payroll outsourcing in Nigeria ensure compliance with labour and tax laws?

    Mercans’ payroll outsourcing in Nigeria covers salary payments, tax deductions, social security contributions and statutory filings in line with Nigerian labour and tax regulations. This comprehensive service ensures payroll operations are accurate, timely and fully compliant with local legal requirements.

    Can an Employer of Record in Nigeria hire employees and manage work permits for international companies?

    Yes. Mercans as your EOR in Nigeria can hire employees on behalf of your company and handle procedures for work permits, visas and residence authorisations for foreign nationals. This enables your business to engage both local and expatriate talent in Nigeria while maintaining full legal compliance.

    What are the main benefits of using EOR and payroll services in Nigeria for global expansion?

    Key benefits include rapid access to Nigeria’s talent pool without local entity setup, full compliance with Nigerian labour and tax laws, reduced administrative and legal risk, access to local HR and payroll expertise through Mercans, and flexible workforce scaling tailored to your global expansion needs.

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