Hiring in Nigeria

Nigeria's primary employment legislation is the Labour Act (Cap L1, Laws of the Federation 2004), which covers all employees except those in managerial, executive, or administrative roles and public servants covered by separate statutes. The Act sets baseline standards for contracts, wages, hours of work, and termination. The Employee Compensation Act of 2010 replaced the old Workmen's Compensation Act and established the Nigeria Social Insurance Trust Fund (NSITF) to handle workplace injury and occupational disease claims. All private-sector employers must register with NSITF and contribute 1% of total monthly payroll.

Termination rules under the Labour Act are tied to length of service. Employees with less than 3 months of service require no notice. Those with 3 months to 2 years of service require 1 week of written notice. Employees with 2 to 5 years get 2 weeks of notice, and those with 5 or more years get 1 month of notice. Either party can pay wages in lieu of notice. There is no statutory severance or redundancy pay under the Labour Act, but many employers provide gratuity based on collective agreements, company policy, or contractual terms. Wrongful dismissal claims go to the National Industrial Court of Nigeria (NICN), where reinstatement and damages are common remedies.

Vacation and leave entitlements start at a minimum of 6 working days of paid annual leave after 12 months of continuous service. Most employers offer more than the statutory minimum, with 15 to 20 days being standard practice in white-collar roles. Nigeria observes 11 gazetted public holidays per year, including Democracy Day (June 12), Independence Day (October 1), and several Islamic and Christian holidays whose exact dates shift annually. Employees who work on public holidays are entitled to an additional day off or overtime compensation.

Payroll in Nigeria involves several mandatory contributions. Under the Pension Reform Act of 2014 (as amended), employers contribute a minimum of 10% and employees contribute 8% of monthly emoluments (basic salary, housing, and transport allowances) to a Retirement Savings Account managed by a licensed Pension Fund Administrator. The National Housing Fund (NHF) requires employee contributions of 2.5% of basic salary. The Industrial Training Fund (ITF) levy is 1% of annual payroll for employers with 5 or more employees or annual turnover above 50 million naira. NSITF contributions are 1% of monthly payroll, paid entirely by the employer. The National Health Insurance Scheme (now National Health Insurance Authority under the 2022 Act) mandates employer contributions of 10% and employee contributions of 5% of basic salary for organizations with 5 or more employees.

Overtime pay under the Labour Act applies to work beyond normal hours, which are typically 8 hours per day or 40 hours per week for most industries. The Act does not prescribe a fixed overtime rate, so the rate is determined by mutual agreement, collective bargaining, or the employment contract. In practice, most employers pay 1.5 times the normal hourly rate for regular overtime and 2 times the rate for work on rest days and public holidays. The Labour Act prohibits women from working at night in industrial settings, though this provision is widely considered outdated and is inconsistently enforced.

Maternity leave in Nigeria is 12 weeks with full pay under the Labour Act, split as 6 weeks before and 6 weeks after delivery. There is no statutory paternity leave at the federal level, though some states (Lagos, for example) and many private employers provide 1 to 2 weeks of paid paternity leave as a benefit. The Employees' Compensation Act requires employers to maintain a safe workplace and report occupational injuries within 7 days. Contributions to NSITF under this Act fund compensation for death, permanent disability, and temporary disability arising from workplace incidents.