Key Insights on Hiring in Nigeria

Understanding Types of Employment Contracts in Nigeria

In Nigeria, employment relationships are governed by formal agreements that clearly outline the rights, duties, and expectations of both the employer and the employee. The Nigerian Labour Act requires that every contract of employment exceeding three months must be documented in writing and issued not later than three months from the start of employment.

Employment contracts may vary depending on the nature, duration, and remuneration of the role. Understanding these distinctions is vital for legal compliance, effective workforce planning, and fair treatment of employees.

Common types of employment contracts in Nigeria include:

• Permanent/Indefinite Contracts
• Fixed-Term Contracts
• Casual/Short-Term Contracts
• Part-Time Contracts

Understanding Probationary Periods in Nigeria

In Nigeria, probationary periods are commonly used by employers to assess a new employee’s performance and overall suitability for the role. Although the Labour Act does not specify the maximum length of probation, it is generally accepted that probation should last between three to six months, depending on the role and company policy. During this period, either party may terminate the employment with shorter notice than would apply to confirmed staff, unless otherwise agreed in the contract.

Understanding the Rights and Duties of Workers in Nigeria

Workers in Nigeria are entitled to fundamental protections under the Labour Act and other employment regulations. These include the right to fair wages, safe working conditions, rest and leave, and freedom of association (including forming or joining trade unions).

In turn, employees are expected to:

• Perform their duties diligently and professionally.
• Obey lawful instructions from employers.
• Promote workplace safety.
• Protect company property and confidential information.
• Avoid any form of misconduct or negligence.

This dual structure of rights and responsibilities promotes a balanced and respectful employment relationship.

Understanding Working Hours in Nigeria

Standard working hours are generally:

• Eight (8) hours per day
• Forty (40) to Forty-Eight (48) hours per week, depending on the industry

Any additional hours worked beyond the standard time must be treated as overtime and compensated accordingly, based on the employer’s internal policy or collective agreement.

Understanding Leave Entitlements in Nigeria

Leave entitlements legally protected and must be honoured by employers. Under the Labour Act, the main categories of leave include:

• Annual Leave
• Sick Leave
• Maternity Leave
• Public Holidays
• Casual/Special Leave; may be granted at the discretion of the employer.

Overview of Taxation and Social Security in Nigeria

Nigeria operates a multi-tiered tax and social security system designed to ensure compliance, revenue mobilization, and worker protection. Employers in Nigeria must navigate a range of obligations that include:

• Income Tax (Pay As You Earn – PAYE)
• Corporate and Other Business Taxes
• Social Security and Pension Contributions; – Social security in Nigeria is focused primarily on pensions and employee welfare through national schemes:

1. Pension Scheme
2. National Social Insurance Trust Fund (NSITF)
3. National Housing Fund (NHF)
4. Industrial Training Fund (ITF)
5. Employee Compensation Act (ECA)

Penalties for Non-Compliance

Non-compliance can result in:

• Interest and penalties on late remittances
• Fines or closure of business premises
• Public naming and shaming
• Loss of tax clearance certificates (TCCs), which are often required for government contracts and regulatory renewals