Country Overview
Nigeria is Africa’s largest economy and most populous country, offering a dynamic environment for international businesses and expatriates. From the commercial energy of Lagos — the country’s economic powerhouse — to the administrative calm of the capital Abuja, Nigeria boasts a rich cultural heritage, significant economic opportunities, and a familiar business culture for English speakers.
With a population of approximately 242 million in 2026, Nigeria offers a young and growing workforce with deep expertise across Oil & Gas, Financial Services, Technology, Telecommunications, and Professional Services. English is the official language, which simplifies integration for international teams. Non-ECOWAS nationals require work authorisation, while ECOWAS citizens benefit from visa-free entry under regional protocols.
*This guide is intended for general informational purposes only and should not be viewed as legal or tax advice. The information discussed may change frequently, and Access Financial cannot guarantee that all content remains current at all times.
2026 Key Legislative Updates
The Nigeria Tax Act 2025 took effect on 1 January 2026, replacing the Personal Income Tax Act with new progressive bands (0%–25%) and a tax-exempt threshold of ₦800,000. The National Minimum Wage Act 2024 raised the statutory minimum to ₦70,000/month. The new eVisa system launched, replacing paper visa-on-arrival approvals, and the NHIA Act now mandates health insurance for employers with 5+ staff.
Contracts
Nigerian employment contracts define the terms of engagement — type, duration, notice, pay, and benefits. Under the Labour Act, all employees must be issued a written statement of terms within three months of starting work.
Contract Types
| Contract Type | Duration | Key Features |
|---|---|---|
| Permanent (Open-ended) | Indefinite | Most common; continues until terminated by either party with notice; full statutory benefits |
| Fixed-Term | Specified end date | Common for projects, NGOs, consultancies; ends automatically unless renewed |
| Probationary | 3–6 months | Initial trial period; shorter notice (typically 1 week); confirmation in writing on completion |
| Casual / Daily | Short-term | Limited statutory benefits; common in construction and hospitality |
| Project-based | Until completion | Treated similarly to fixed-term; ends on task completion |
Fixed-Term Renewal — Implied Permanency
Nigerian law does not set a strict cap converting fixed-term contracts to permanent status. However, the National Industrial Court has increasingly treated repeated renewals as evidence of de facto permanent employment, especially where there is no genuine project-based justification. Best practice: review the basis for renewal at each cycle.
What Your Contract Must Include
Mandatory Statement of Terms
- Job title and description
- Start date and contract duration (if fixed-term)
- Salary, allowances and pay frequency
- Working hours and place of work
- Annual leave entitlement
- Notice period (both sides)
- Sick leave entitlement
- Pension and HMO scheme details
Common Additional Clauses
- Confidentiality / NDA provisions
- Intellectual property assignment
- Restrictive covenants (non-compete, non-solicit)
- 13th month / annual bonus structure
- Leave allowance (typically 10% of basic salary)
- Housing, transport and utility allowances
- Disciplinary and grievance procedure reference
Salary Structure
Nigerian companies traditionally break down salary into basic salary and several allowances — a structure with historical tax origins. Total compensation is typically split across the following components, with proportions varying by employer:
| Component | Typical % of package | Notes |
|---|---|---|
| Basic Salary | 30–50% | Core pay; basis for pension calculation |
| Housing Allowance | 20–30% | To support accommodation costs |
| Transport / Car Allowance | 10–20% | For commuting and vehicle upkeep |
| Utility Allowance | 5–10% | Telephone, electricity, internet |
| Leave Allowance | ~10% of basic (annual) | Paid when annual leave is taken |
| 13th Month Bonus | 1 month salary | Customary, not mandated by law |
Access Financial drafts Nigerian-compliant employment contracts and manages onboarding for EOR engagements.
Working Hours & Overtime
Standard working hours in Nigeria are typically 8 hours per day, 5 days a week (Monday to Friday, 8am–5pm with a lunch break). The Labour Act sets baseline protections, but specific overtime rates and rest periods are largely governed by the employment contract.
| Parameter | Rule | Notes |
|---|---|---|
| Standard hours | 40 hrs/week (8 hrs/day) | Typical Mon–Fri schedule; varies by sector |
| Overtime — weekday/Saturday | 1.5× normal rate | Customary; subject to contract terms |
| Overtime — Sunday/public holiday | 2× normal rate | Customary practice |
| Night shift premium | ~25% extra | Common in industrial roles |
| Senior staff overtime | No statutory rate | Often “no overtime” clauses for managers |
| Rest break | Per contract | Typically 1 hour for lunch |
National Minimum Wage Act 2024
The national minimum wage rose to ₦70,000/month from ₦30,000, effective 2024. Skilled and expatriate roles pay significantly above this floor. Sector-specific minimums may apply in some industries.
Probation Period
No statutory probation period exists in Nigerian law — it is contractual, typically 3 to 6 months. Probation allows either party to assess fit before confirmation as a permanent employee.
| Parameter | Standard practice | Legal notes |
|---|---|---|
| Typical duration | 3–6 months | No statutory maximum; 6 months most common |
| Notice during probation | 1 week (contractual) | Statutory minimum is 1 day if under 3 months service |
| Extension | Allowed | Must be agreed in writing; typically up to 3 months |
| Confirmation | Written letter | Triggers full benefits and longer notice period |
| Day-one statutory rights | Yes | Minimum wage, health & safety, discrimination protection |
Immigration & Work Visas
Nigeria operates a quota-based work permit system. Non-ECOWAS nationals require a long-stay work visa secured before arrival, followed by post-arrival residence permit (CERPAC) registration.
ECOWAS Free Movement
Citizens of ECOWAS member states (Ghana, Senegal, Côte d’Ivoire, etc.) can enter Nigeria visa-free for up to 90 days. For long-term work, they obtain an ECOWAS Residence Card (valid 2 years) rather than a traditional expatriate work permit.
Main Work Visa Categories
| Visa Route | Purpose | Quota? | Duration |
|---|---|---|---|
| STR Visa (R2A) | Long-term employment | Yes — expatriate quota required | 90-day entry; regularised via CERPAC |
| Temporary Work Permit (R10) | Short-term technical assignments | No | 1–3 months; non-extendable in-country |
| Free Zone Employment (R3A) | Work in export processing zones | Zone authority approval | 1–2 years renewable |
| Dependants’ Visa (R2B/R2C) | Spouse and children of work permit holder | Linked to main applicant | Matches main applicant; no work rights |
| Highly Skilled Immigrant (N category) | Permanent residency route | NIS approval | Long-term residency |
CERPAC — Residence & Work Permit
The Combined Expatriate Residence Permit and Alien Card (CERPAC) is the biometric card that serves as the actual residence permit and work authorisation. STR visa holders must regularise their stay within 90 days of arrival to obtain CERPAC.
| Item | Cost (USD) | Notes |
|---|---|---|
| CERPAC (annual) | $2,000 | Annual fee per expatriate; biennial issuance available |
| STR Visa application | Varies by country | Reciprocity-based; check local Nigerian mission |
| Expatriate Quota approval | Per employer | Federal Ministry of Interior approval |
| National Identification Number (NIN) | Free | Mandatory for long-term residents |
| Yellow Fever Card | Vaccination cost | Required at entry — minimum 10 days before arrival |
AF’s immigration team handles STR visa applications, CERPAC processing, expatriate quota filings and NIN registrations across Nigeria.
Leave Entitlements
Nigerian statutory leave entitlements are modest by international standards, but most professional employers offer considerably more generous packages above the legal floor.
Annual Leave
| Parameter | Entitlement | Notes |
|---|---|---|
| Statutory minimum | 6 working days/yr | After 1 year continuous service (Labour Act) |
| Market standard (professional) | 15–25 working days | 3–5 weeks; often increases with seniority |
| Leave allowance | ~10% of annual basic salary | Customary “leave bonus” paid when taking annual leave |
| Carryover | Per company policy | Often “use it or lose it” by Q1 of next year |
Parental Leave
| Leave type | Duration | Pay | Notes |
|---|---|---|---|
| Maternity (Labour Act) | 12 weeks (6 before + 6 after) | Min. 50% of salary | After 6 months service; many employers pay 100% |
| Maternity (Federal Civil Service) | 16 weeks (4 months) | Full pay | Public sector standard |
| Maternity (Lagos State) | 6 months | Full pay | State civil service to encourage breastfeeding |
| Paternity (Federal Civil Service) | 14 days (2 weeks) | Full pay | First two surviving children only |
| Paternity (private sector) | 3 days – 2 weeks | Per company policy | Not statutory federally; varies by employer |
Sick Leave
| Parameter | Rule |
|---|---|
| Statutory entitlement | Up to 12 working days/year on full pay |
| Eligibility | After 6 months of service |
| Medical certificate | Required for absences over 2–3 days |
| Company practice | Often 1 month full pay + extended half pay for serious illness |
Public Holidays 2026
Nigeria observes 13 federal public holidays in 2026, combining Christian, Islamic and secular national celebrations. Islamic holidays are subject to moon-sighting confirmation by the Sultan of Sokoto and may shift by 1–2 days.
| Date | Day | Holiday | Type |
|---|---|---|---|
| 1 January | Thursday | New Year’s Day | Secular |
| 19–20 March | Thursday–Friday | Eid el-Fitr (End of Ramadan) | Islamic — tentative |
| 3 April | Friday | Good Friday | Christian |
| 6 April | Monday | Easter Monday | Christian |
| 1 May | Friday | Workers’ Day | Secular |
| 27–28 May | Wednesday–Thursday | Eid el-Kabir (Eid al-Adha) | Islamic — tentative |
| 12 June | Friday | Democracy Day | National |
| 25–26 August | Tuesday–Wednesday | Eid el-Maulud (Prophet’s Birthday) | Islamic — tentative |
| 1 October | Thursday | Independence Day | National |
| 25 December | Friday | Christmas Day | Christian |
| 26 December | Saturday | Boxing Day | Christian |
Notice Periods
The Labour Act sets statutory minimum notice based on length of service. Professional and management contracts typically specify longer notice periods than the statutory floor.
| Length of service | Statutory minimum notice | Typical professional contract |
|---|---|---|
| Less than 3 months | 1 day | 1 week |
| 3 months – 2 years | 1 week | 1 month |
| 2 – 5 years | 2 weeks | 1–3 months |
| 5 years and over | 1 month | 3 months |
Termination & Severance
Nigerian employment can generally be terminated with proper notice (or pay in lieu) for any reason that is not unlawful. The National Industrial Court has increasingly applied fairness principles, particularly for procedurally flawed terminations.
| Termination scenario | Required payment | Notes |
|---|---|---|
| Termination with notice | Salary + accrued leave + PILON if applicable | No statutory severance for ordinary termination |
| Summary dismissal (gross misconduct) | Salary up to last day only | Requires fair hearing / due process |
| Redundancy | Negotiated package (commonly 1 month/year of service) | Labour Act requires consultation; “last-in-first-out” principle |
| Resignation | Salary + accrued leave + pension preserved | Notice or PILON per contract |
| Retirement (age 60+) | Pension benefits accessible | 25% lump sum + programmed withdrawal or annuity |
National Industrial Court — Evolving Fairness Standards
The National Industrial Court increasingly considers international labour standards and fairness principles, even where Nigerian statute is silent. Document fair processes, written warnings and hearings — even for “termination without cause” — to mitigate dispute risk.
Income Tax
Personal income tax is administered at the State level by the relevant State Internal Revenue Service (e.g. LIRS in Lagos), but rates and rules are uniform nationwide under the Nigeria Tax Act 2025, effective 1 January 2026. All employees are taxed via PAYE.
Personal Income Tax Bands 2026
| Band | Annual taxable income (₦) | Rate |
|---|---|---|
| First band | 0 – 800,000 | 0% |
| Next band | 800,001 – 3,000,000 | 15% |
| Next band | 3,000,001 – 12,000,000 | 18% |
| Next band | 12,000,001 – 25,000,000 | 21% |
| Next band | 25,000,001 – 50,000,000 | 23% |
| Top band | Above 50,000,000 | 25% |
CRA Abolished — New Rent Relief Introduced
The Nigeria Tax Act 2025 abolished the Consolidated Relief Allowance (CRA). It is replaced by a rent relief equal to 20% of annual rent paid, capped at ₦500,000. Pension, NHF, life insurance and NHIS contributions remain deductible.
VAT & Other Taxes
| Tax | Rate | Applies to |
|---|---|---|
| Value Added Tax (VAT) | 7.5% | Most goods and services |
| VAT — exempt | 0% | Basic food, medical, pharmaceuticals, education, exports |
| VAT registration threshold | ₦25M turnover | Below threshold: small company exemption |
| Withholding tax (services) | 5–10% | Reduced under applicable double tax treaties |
| Capital Gains Tax (companies) | 10% | Individuals taxed at PIT rates from 2026 |
Tax Returns & TIN
Under the Nigeria Tax Administration Act 2025, all taxable persons must register with the Nigeria Revenue Service (NRS, formerly FIRS) or relevant State Internal Revenue Service and obtain a Tax Identification Number (TIN). Annual returns are due by 31 March of the following year. PAYE-only employees may be covered by employer’s annual filing.
Let Access Financial handle your Nigerian payroll — fully compliant with the new Nigeria Tax Act 2025, with local specialists on call.
Benefits
Nigerian statutory benefits are relatively limited compared to OECD standards. Competitive employers layer extensive supplemental benefits to attract and retain professional talent — particularly health, life cover and allowances.
Mandatory Statutory Benefits
| Benefit | Rate / Amount | Notes |
|---|---|---|
| Contributory Pension | 18% total minimum | 10% employer + 8% employee |
| Group Life Assurance | 3× annual salary minimum | Mandatory under Pension Reform Act |
| Health Insurance (NHIA) | Employer-funded HMO | Mandatory for employers with 5+ employees |
| Employee Compensation (NSITF) | 1% of payroll | Workplace injury cover |
| Annual Leave | 6 working days minimum | Plus 13 public holidays |
| Maternity Leave | 12 weeks at 50%+ pay | Many employers offer full pay |
Market-Standard Supplemental Benefits
| Benefit | Prevalence | Typical provision |
|---|---|---|
| Private HMO Health Insurance | Standard among professional employers | AXA Mansard / Avon HMO / Hygeia |
| 13th Month Bonus | Very common | 1 month basic salary at year-end |
| Leave Allowance | Common | ~10% of annual basic salary |
| Housing Allowance | Standard | 20–30% of total package |
| Transport / Car Allowance | Standard | 10–20% of total package; or company car for seniors |
| Performance Bonus | Common in finance/tech | Variable 10–30% of salary |
| Remote / Hybrid Working | Increasingly common | 2–3 days from office in tech/professional services |
Pension System
Nigeria operates a Contributory Pension Scheme under the Pension Reform Act 2014, mandatory for both public and private sector employers with 3 or more employees.
| Parameter | Rule | Notes |
|---|---|---|
| Total minimum contribution | 18% | 10% employer + 8% employee |
| Contribution base | Basic + Housing + Transport | The three core allowances combined |
| Account type | Retirement Savings Account (RSA) | Managed by Pension Fund Administrator (PFA) |
| Retirement age | 60 (or 35 years of service, whichever first) | Public sector: 60 or 65 for certain professions |
| Early retirement | From age 50 | If voluntarily retired or out of work for 4+ months |
| Lump sum at retirement | Up to 25% | Balance via programmed withdrawal or annuity |
| Foreign nationals exit | Full RSA withdrawal | Permitted on permanent departure from Nigeria |
| Tax treatment | Fully deductible | Both employer and employee contributions |
Insurances
Mandatory and recommended insurances for employers, employees and contractors in Nigeria.
| Insurance | Minimum cover | Required by |
|---|---|---|
| Group Life Assurance | 3× annual salary | Pension Reform Act 2014 |
| Employee Compensation (NSITF) | 1% of payroll | Employee Compensation Act 2010 |
| Health Insurance (HMO) | Per scheme | NHIA Act 2022 (5+ employees) |
| Motor Insurance | Third party minimum | Motor Vehicles (Third Party Insurance) Act |
| Workmen Building Insurance | Per building | For commercial premises > 2 floors |
Professional Indemnity Insurance — Contractors & Expats
Often contractually required by end-clients, particularly in oil & gas, financial services and engineering. Covers negligence and errors-and-omissions claims. Many expats also opt for international health insurance with medical evacuation cover, given the gaps in local healthcare for complex cases.
Private Health Insurance (HMOs)
| Provider | Type | Notes |
|---|---|---|
| AXA Mansard Health | Comprehensive | Wide hospital network in Lagos, Abuja, Port Harcourt |
| Avon HMO | Comprehensive | Multi-tier plans for SMEs and corporates |
| Hygeia HMO | Comprehensive | One of Nigeria’s oldest HMOs |
| Reliance HMO | Digital-first | Tech-enabled platform popular with startups |
| International (IMG, Cigna, Allianz) | Global coverage | Includes medical evacuation; preferred by senior expats |
AF Solutions
Access Financial has supported end-clients, recruitment agencies and contractors operating in Nigeria for over two decades, providing payroll, EOR, immigration and tax compliance services across the country.
For End-Clients
Managing a contingent workforce can be complex. Our solutions streamline workforce management, making it simple, compliant, and cost-effective.
For Recruiters
We offer a complete suite of services, allowing you to simply, compliantly, and efficiently place your candidates internationally, with minimum fuss.
For Contractors
Focus on what you do best and let us take care of your payroll, tax compliance, social security, and immigration needs.
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FAQ
Find answers to our most frequently asked questions below.
What solutions do you offer in Nigeria?
In Nigeria, Access Financial provides one compliant engagement model:
Employed/EOR (umbrella): We become the legal employer of your employees in Nigeria. Your business retains full control of the day-to-day work and deliverables, while we carry the employment, payroll, and tax liability.
When should a company consider using an EOR?
An EOR is especially useful in a range of scenarios. It is the most efficient route when you want to convert existing contractors into compliant employees and reduce misclassification risk, or when you need to hire talent in a country where you do not have a local entity. It also allows you to onboard quickly without going through a lengthy and complex company registration process, while ensuring full compliance with local employment law, payroll, and tax regulations. Beyond these core use cases, an EOR is equally valuable when you are testing a new market before committing to a long-term investment, or when you simply need temporary or project-based hires abroad.
Can we hire both local nationals and foreign employees through an EOR?
Yes. Our EOR services cover both local nationals and foreign hires. For foreign nationals, additional visa or work permit requirements apply, and we can support the application process end-to-end — including sponsorship in jurisdictions where we hold the relevant licence.
Is permanent establishment (PE) risk avoided?
An EOR is a third-party business that legally employs international workers on your behalf, creating a clear layer of separation between your company and the staff based in other countries. The EOR becomes the legal employer for those workers, so although the employees continue to deliver services to your business, the legal distancing helps mitigate many common PE risks. That said, PE is determined by the facts on the ground (the nature of the activity, contract-signing authority, where revenue is generated, and so on), not solely by who issues the payslip. We therefore recommend reviewing each engagement with our specialists to confirm the appropriate structure.
What is your pricing model?
Our standard management fee is 5% of the contract value, with a minimum of €550. We also offer volume discounts on bulk engagements. To discuss pricing for your specific scenario, please get in touch with our team here: https://accessfinancial.com/#get-started.
Social Insurance
Nigeria’s social insurance system covers pension (Contributory Pension Scheme), workplace injury (NSITF), health insurance (NHIA) and housing (NHF). There is no unemployment benefit at federal level.
Employer Contributions
Employee Contributions