🇳🇬 EOR Guide —
Nigeria
Everything you need to know about using an Employer of Record in Nigeria — provider fees, compliance risks, hire speed, and EOR vs direct employment.
Employer SS rate
15% (10% pension + 2% NSITF + 1% ITF + other levies)
Income tax
7–24% progressive rates (federal and state combined)
Minimum annual leave
21 working days plus 12 public holidays
Notice period
1 month (junior staff) to 3 months (senior management)
Severance pay
1 month salary per year of service (gratuity)
Minimum wage
NGN 30,000 per month (federal minimum)
Our Recommendation
EOR strongly recommended for Nigeria due to complex regulatory environment and compliance risks
Nigeria's employment landscape requires navigation of federal labour laws, state-specific regulations, and complex pension/healthcare obligations under PENCOM and NSITF schemes. The regulatory environment is challenging with frequent policy changes and enforcement inconsistencies. EOR provides essential local expertise to manage these complexities while companies test the market.
EOR provider fee range for Nigeria
Rates vary by provider, headcount, and benefits scope. Always request itemised quotes from at least three providers.
EOR vs Direct Employment
EOR advantages in Nigeria
- Manages PENCOM pension contributions and National Social Insurance Trust Fund (NSITF) compliance requirements
- Handles complex Nigerian Labour Act termination procedures and gratuity calculations
- Navigates state-specific Personal Income Tax (PIT) withholding requirements across 36 states
- Manages Industrial Training Fund (ITF) contributions and Skills Development Levy compliance
- Provides local banking and payroll infrastructure in Nigerian Naira with CBN regulations
EOR limitations in Nigeria
- Limited provider ecosystem with higher fees due to market complexity
- Potential delays in salary payments due to banking system inefficiencies
- Less control over local employee relations and union interactions
- Higher costs compared to direct employment for larger teams
Direct employment advantages
- Full control over compensation structures and employee benefits design
- Direct relationships with local unions and works councils
- Lower per-employee costs for larger teams
- Direct access to Nigerian talent market and recruitment channels
Direct employment limitations
- Requires Nigerian company incorporation through Corporate Affairs Commission (CAC)
- Must navigate complex PENCOM pension fund administrator selection and compliance
- Compliance with 36 different state Personal Income Tax laws and filing requirements
- Managing NSITF workplace accident insurance and Industrial Training Fund obligations
Local Entity Options
Setting up a legal entity in Nigeria.
If you outgrow EOR or prefer direct employment, these are the main legal structures available in Nigeria for foreign companies.
Private Limited Company
Setup time
7–14d
Est. cost
$800
Min. capital
$65
Corp. tax
30%
Div. WHT
10%
VAT rate
7.5%
Annual obligations
- Annual returns
- Audited financial statements
- Companies income tax returns
- VAT returns
Overview
Most common entity type for foreign investment
Representative Office
Setup time
14–30d
Est. cost
$1,000
Min. capital
None
Corp. tax
0%
Div. WHT
0%
VAT rate
0%
Annual obligations
- Annual returns
- Activity reports
Overview
Limited to liaison and marketing activities only
Public Limited Company
Setup time
14–21d
Est. cost
$1,500
Min. capital
$1,300
Corp. tax
30%
Div. WHT
10%
VAT rate
7.5%
Annual obligations
- Annual returns
- Audited financial statements
- Companies income tax returns
- VAT returns
- SEC filings
Overview
Required for public companies and large corporations
Branch Office
Setup time
21–45d
Est. cost
$2,000
Min. capital
None
Corp. tax
30%
Div. WHT
10%
VAT rate
7.5%
Annual obligations
- Annual returns
- Audited financial statements
- Companies income tax returns
- VAT returns
Overview
Extension of foreign parent company
Compliance Risks
Key EOR compliance risks in Nigeria.
Discuss each of these with your chosen provider before signing.
PENCOM pension contributions
HighEmployers must contribute 10% of employee salary to approved Pension Fund Administrators under the Pension Reform Act 2014. Non-compliance results in penalties of 2% per month on outstanding contributions plus potential criminal liability for company directors.
Personal Income Tax withholding
HighPAYE tax must be withheld and remitted to relevant State Internal Revenue Service within prescribed timeframes. Late remittance incurs penalties of 5% per month plus interest, with potential prosecution under state tax laws.
Industrial Training Fund compliance
MediumCompanies with 5+ employees must contribute 1% of annual payroll to ITF under the Industrial Training Fund Act. Non-compliance results in penalties and potential business license suspension by relevant authorities.
National Social Insurance Trust Fund
MediumEmployers must contribute 2% of employee salary for workplace accident insurance under NSITF Act. Failure to comply results in penalties and loss of legal protection against workplace injury claims.
Cost Estimator
Estimate your Nigeria EOR cost.
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