Roles and Responsibilities of an Employer of Record in Nigeria

Expanding into a new country often presents various challenges, especially regarding local regulations, payroll, and employment laws. For businesses prioritizing speed and local expertise in Nigeria, an Employer of Record (EOR) can be the perfect solution to meet global growth objectives. An EOR enables swift hiring and onboarding of local talent—typically within two weeks – without the burdensome process of establishing a costly legal entity.

In this article, we’ll outline the essential requirements for hiring in Nigeria, covering employment law, payroll, benefits, and how Mercans’ EOR services, complemented by our Global Employment Outsourcing (GEO) solution, can simplify international employment for your company.

Hire employees and contractors with an employer of record (EOR) in Nigeria. Learn more.

What Is an Employer of Record (EOR)?

An Employer of Record, or international Professional Employer Organization (PEO), allows businesses to employ staff in foreign countries without establishing a legal entity. Acting as the legal employer, an EOR manages all aspects of employment compliance, payroll, and HR responsibilities, while the client company oversees daily operations.

Mercans’ EOR services facilitate rapid entry into the Nigerian market by enabling businesses to hire local talent while mitigating the costs and risks associated with entity registration. Our local HR experts handle employment contracts, payroll processing, taxes, and benefits, ensuring adherence to Nigerian regulations.

Key Considerations for Hiring in Nigeria

Employment Laws

The Labor Act serves as the primary source of employment law in Nigeria, governing contracts, wages, working hours, and benefits. While it primarily applies to lower-cadre workers, additional laws govern administrative, executive, and professional roles, including:

• Trade Union Act
• Employees Compensation Act
• Factories Act
• Pensions Act
• Trade Disputes Act

Employers must provide written employment contracts within three months of employment. Mercans assists in drafting and validating these contracts to ensure compliance with local laws.

Working Hours and Overtime

Normal working hours in Nigeria are established through mutual agreement or collective bargaining. The Labor Act sets restrictions on working hours for individuals under 16 and mandates that employees working six hours or more receive a total of one hour in rest periods. Employees are entitled to one rest day per week. Overtime—hours worked beyond the regular schedule—does not have a fixed rate defined by the Labor Act, though it is customary to compensate employees for additional hours.

Compensation and Payroll

When offering salaries in Nigeria, employers should consider:

• The minimum wage for businesses with 50 or more employees is 30,000 Naira per month.
• Employees working on public holidays receive 200% of their regular pay.
• Wages must be paid at least monthly.

Mercans provides valuable insights and resources to ensure compensation packages are both competitive and compliant. Our EOR service streamlines payroll processing, including deductions and statutory filings.

Employee Benefits and Leave

Understanding employee benefits is essential when hiring in Nigeria. Statutory benefits include:

• Maternity Leave: Pregnant employees are entitled to 12 weeks of leave, with six weeks before the due date. If employed for at least six months, they receive 50% of their salary during this period.
• Vacation Leave: Employees are entitled to six working days of annual leave after 12 months of continuous service, while workers under 16 receive 12 days.
• Public Holidays: Nigeria observes several national public holidays, including New Year’s Day, Christmas, and Workers’ Day, as well as Islamic holidays like Eid al-Fitr and Eid al-Adha.
• Sick Leave: Employees are entitled to 12 days of paid sick leave annually, subject to medical certification.

Termination and Severance Pay

In Nigeria, either party can terminate an employment contract with appropriate notice, which varies by length of service:

• Less than three months: one-day notice
• Three months to two years: one-week notice
• Two to five years: two-week notice
• More than five years: one-month notice

While severance pay is not legally mandated, employees are entitled to payment for hours worked, accrued annual leave, and any other outstanding entitlements upon termination.

Streamlined Onboarding with an EOR

Onboarding employees in Nigeria can be complex, but Mercans simplifies the process. Here’s how:

• Welcome Call: We discuss Nigeria’s HR requirements and address any questions.
• Employment Contracts: We prepare and customize contracts in English or the local language.
• Data Collection: We gather tax, banking, and personal information to set up payroll and benefits.
• Ongoing Support: Local HR and payroll contacts are available for employees’ questions or concerns.

Our team ensures that every step complies with Nigerian labor laws, allowing you to concentrate on your core business while we handle administrative complexities.

Payroll and Benefits Administration

Mercans offers comprehensive payroll and benefits administration services in Nigeria, ensuring compliance with statutory obligations, including pension contributions and health coverage. Employers with 15 or more workers must contribute to Nigeria’s social security system, totaling 18% of the employee’s monthly earnings (10% employer, 8% employee). Employers can choose to cover the entire contribution, raising the rate to 20%. Additional benefits, such as health insurance or supplemental pension plans, can also be customized to align with your company’s and employees’ needs.

Compliance and Modern HR Practices

Maintaining compliance with local labor laws is crucial for businesses entering new markets. Nigeria’s regulatory environment can be intricate, but Mercans ensures your company adheres to all employment, tax, and payroll regulations. Our EOR service features built-in checks and alerts to align your practices with the latest changes in Nigerian labor laws, mitigating the risk of non-compliance and providing peace of mind as you expand your operations.

Advantages of Using an EOR in Nigeria

• Efficient Market Entry: An EOR allows businesses to swiftly enter the Nigerian market without establishing a legal entity, ideal for companies testing the waters or scaling operations quickly.
• Labor Law Compliance: An EOR ensures adherence to Nigerian labor regulations, managing payroll, social security contributions, and tax filings to minimize legal risks.
• Cost-Effective Expansion: Utilizing an EOR helps businesses avoid the costs of setting up a subsidiary, hiring HR teams, or managing administrative overhead, enabling a focus on core activities.
• Risk Mitigation: An EOR protects businesses from non-compliance risks, misclassification issues, and employment disputes, ensuring all local laws are met.
• Simplified Payroll Management: An EOR handles payroll and taxation in line with Nigerian requirements, ensuring accurate payments and reducing administrative burdens.

Benefits of an EOR for Workforce Management

• Access to Local Talent: Nigeria’s educated workforce, particularly in tech and professional services, can be accessed more easily through an EOR, leveraging local expertise for effective recruitment.
• Employee Benefits Administration: An EOR streamlines the management of benefits, ensuring compliance and providing competitive packages to attract and retain talent.
• Work Permits and Immigration Support: An EOR manages work permits and immigration compliance for foreign hires, streamlining the bureaucratic processes often encountered in Nigeria.

Choosing the Right EOR Provider

When selecting an EOR provider for Nigeria, businesses should consider:

• Compliance Expertise: Look for providers knowledgeable about Nigerian labor laws and tax regulations.
• Comprehensive Services: Ensure the EOR offers end-to-end solutions, including recruitment, payroll, benefits, and legal compliance.
• Technology Integration: Opt for providers with modern platforms that support scalability and efficient data management.
• Local Knowledge: Choose an EOR with established local networks and insights into regional labor markets.
• Cost Efficiency: Compare pricing structures to ensure competitive rates while delivering essential services for market entry.

Why Choose Mercans as Your EOR in Nigeria?

With over a decade of experience providing global EOR services in over 170 countries, including Nigeria, Mercans offers extensive knowledge of local employment laws and cultural practices. We ensure your company operates smoothly and compliantly in new markets. From payroll processing and employee onboarding to HR support and statutory compliance, Mercans delivers a complete solution for managing your workforce in Nigeria.
If you’re ready to expand your business into Nigeria, contact us today to discover how our EOR service can meet your international hiring needs.