Hiring in Nigeria: the expatriate quota, the contract and what comes off pay, step by step

Move someone who is already in Nigeria

A foreign national accepts employment only with the written consent of the Comptroller-General of Immigration. An expatriate quota position is granted to one company for a named job. A move to a new employer needs a quota position that employer holds, and the Comptroller-General's consent to the new employment.

A Nigerian citizen needs no permit. Their move turns on the notice their contract sets. The Labour Act's minimum runs from a day in the first three months to a month from five years.

Check the role is open to a non-Nigerian

An expatriate quota position fills a skills gap where a qualified Nigerian is not readily available. It comes with the expectation that knowledge passes to Nigerian staff, and that the role is in time filled by a Nigerian national.

An Establishment Grant of quota positions usually runs for three years at first, and additional positions for two. A renewal shows the continued need and the training given to Nigerian nationals. A position is expected to pass to a qualified Nigerian after seven years in all, unless special approval is granted. Some senior posts, such as managing director or chief executive, can hold a status that sets that limit aside.

Under the Immigration Act, a national of another member state of the Economic Community of West African States needs no visa, work permit or residence permit. They register with the Immigration Service as one.

Set the contract up right

The employer gives a written statement of the terms within three months of the start, unless a written contract already covers them. It names the employer, the job, the date of engagement, any fixed end date, the notice, the pay and how it is worked out and paid, the hours, holidays and sick pay. A change to those terms is put in writing within a month.

Wages are paid in legal tender, at intervals of no more than a month. Each worker who enters a contract is medically examined at the employer's expense. A probation period is a matter for the contract, since the Labour Act sets none.

Normal hours are those the contract, a collective agreement or a wages board fixes. Hours worked beyond them are overtime. The Labour Act sets no overtime rate, so the contract or a collective agreement sets it. A day of 6 hours or more is broken by rest of at least an hour in all. Each worker has a day of rest of at least 24 consecutive hours in every seven days. Where it is cut short, time off follows within 14 days, or overtime rates are paid instead.

Know the employee test before you engage a contractor

Nigeria's Labour Act treats as a contract of employment any agreement, oral or written, express or implied, by which one person employs another as a worker. A worker includes someone under a contract personally to do any work or labour.

Staff in administrative, executive, technical or professional roles fall outside the Act's definition of a worker. Their annual leave, sick pay and notice rest on the contract. Pension, income tax and the statutory levies apply to them as to anyone else.

A foreign national accepts any employment only with the written consent of the Comptroller-General of Immigration. A role that needs that consent goes through employer of record.

Know what comes off pay each month

Pension takes at least 8% of monthly emoluments from the employee, and you add at least 10%. Monthly emoluments are at least basic pay and the housing and transport allowances. Both shares are remitted within 7 working days of payday. For a late remittance, the National Pension Commission can impose a penalty of at least 2% of the unpaid contribution for each month or part of a month. You also keep group life insurance for each employee, of at least three times their annual total emolument.

Health insurance is mandatory. You register your staff with a State health insurance scheme and pay the contributions that scheme sets.

Income tax is withheld on annual bands. The first NGN 800,000 is taxed at 0%. Then 15% applies up to NGN 3,000,000, 18% up to NGN 12,000,000, 21% up to NGN 25,000,000, 23% up to NGN 50,000,000 and 25% above it. Pay at or below the national minimum wage of NGN 70,000 a month is exempt.

Before the bands apply, the employee's pension, health insurance and housing fund contributions come off. So do life insurance premiums and the interest on a loan for their own home. Rent relief takes off 20% of the annual rent paid, up to NGN 500,000.

The National Housing Fund is voluntary for staff in the private sector. An employee earning the minimum wage or more may put 2.5% of monthly income into it.

You alone pay at least 1% of total monthly pay for employee compensation. None of it is deducted from staff. With 25 or more staff outside a free trade zone, you also pay 1% of annual pay to the Industrial Training Fund.

Know the leave your people are entitled to

End employment on the law's terms

Either side can end the contract on notice. The Labour Act's minimum is a day where the contract has run three months or less, and a week up to two years. It is two weeks up to five years, and a month after that. Notice of a week or more is in writing.

Either side can waive notice or accept pay instead. That pay counts only the wages paid in money, without overtime or allowances. All wages are paid by the end of the notice. Notice is not owed where the other side's conduct justifies ending the contract without it.

A woman absent on maternity leave, or on an illness that arises from it, is not given notice of dismissal during her absence.

In a redundancy, the employer tells the union or the workers' representatives the reasons for it and its extent. Selection follows last in, first out within the category affected, weighed against skill, ability and reliability. The employer uses its best endeavours to negotiate redundancy pay.

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