How to Hire and Pay Employees in Nigeria (2025/2026 Guide)

Key Takeaways

• Nigeria offers world-class, affordable talent for global startups.

• Employment laws require written contracts, fair notice periods, and mandatory contributions.

• Hiring and paying through a verified platform like Betternship ensures compliance and employee trust.

How exactly can you hire and pay employees in Nigeria?

Hiring in Nigeria is no longer just a regional play; it’s a strategic one.

The country has one of the fastest-growing tech and startup ecosystems in Africa. Global founders are tapping into it for everything from engineering to operations, customer success, design, and virtual assistance.

But there’s a catch.

Hiring in Nigeria isn’t as simple as sending an offer letter and wiring some cash. The country has its own employment laws, taxes, and payroll systems that foreign companies often overlook until it becomes a compliance nightmare.

This guide breaks down how to hire and Pay Employees in Nigeria, step-by-step, so you can build a compliant, motivated, and scalable team without the legal headaches.

Why Hire in Nigeria?

Before we get into the how, let’s answer the why.

Nigeria is Africa’s largest economy and home to over 220 million people, most of whom are under 35.

The country produces a huge pool of English-speaking, tech-savvy professionals – developers, designers, marketers, and finance specialists – who are used to working remotely with global teams.

Beyond talent quality, Nigeria offers:

• Cost efficiency: Hiring in Nigeria costs significantly less than in Europe or the U.S. without compromising skill.

• Cultural alignment: Time zone overlap with Europe and parts of the U.S. makes communication smoother.

• Strong remote work culture: Many professionals already work for international startups, meaning minimal training or onboarding friction.
  

But tapping into this workforce requires understanding the local landscape, especially how to legally hire and pay people.

Step 1: Understand the Hiring Landscape

When learning how to hire and pay employees in Nigeria, start by knowing the difference between the two key categories:

1. Employees

A full-time employee works under your direction, uses your tools, and follows your company’s schedule or structure. You’re responsible for their taxes, benefits, and compliance.

2. Independent Contractors

Contractors work more autonomously, often for multiple clients. You don’t handle their taxes or benefits, but the relationship must truly be contractual, not disguised employment.

Misclassifying employees as contractors is one of the top mistakes foreign startups make. It can lead to penalties, legal issues, and retroactive tax obligations.

If you’re not setting up a local entity, it’s best to use an Employer of Record (EOR) service like Betternship. We handle local compliance, contracts, payroll, and tax deductions so you can focus on work, not paperwork.

Step 2: Know the Legal Requirements Before Hiring

Nigeria’s employment law is guided by the Labour Act and several other employment-related regulations. Here’s what you need to know before hiring:

Employment Contracts

A written employment contract is mandatory. It should include:

• Job title and responsibilities

• Salary and payment schedule

• Leave entitlements

• Notice period and termination terms

• Confidentiality and IP clauses
  

Contracts must comply with Nigerian law, even if you’re hiring remotely. Using foreign templates without local adaptation is a common (and costly) mistake.

Probation Period

There’s no fixed rule under Nigerian law, but most companies use a three- to six-month probation period. This should be clearly stated in the contract.

Step 3: Understand Work Hours, Leave, and Benefits

Work Hours

A standard workweek in Nigeria is 40 hours, usually spread across five 8-hour days. Overtime policies should be agreed upon in writing; there’s no mandated government rate.

Leave Entitlements

• Annual Leave: 12 working days a year. 
• Sick Leave: 12 paid days per year (requires a medical certificate).

• Maternity Leave: 12 weeks at 50% pay after six months with the same employer.

• Paternity Leave: Not yet federally mandated, but available in some states and private companies.
  

Public Holidays

Nigeria observes around 13 public holidays annually, though exact dates vary. Common ones include New Year’s Day, Independence Day (Oct 1), Eid, and Christmas.

Step 4: Understand Payroll and Taxes

One of the trickiest parts of how to hire and pay employees in Nigeria is managing taxes. Payroll rules can feel complex if you’re not familiar with the system.

Here’s a quick breakdown.

Employee Taxes (PAYE)

Nigeria uses a progressive tax system known as PAYE (Pay As You Earn):

• 7% on the first ₦300,000

• 11% on the next ₦300,000

• 15% on the next ₦500,000

• 19% on the next ₦500,000

• 21% on the next ₦1,600,000

• 24% on any income above ₦3,200,000
  

Employees also contribute to pension and health insurance.

Employer Contributions

Employers are expected to make social contributions totaling around 21% of the employee’s gross salary, which typically includes:

• Pension contribution: 10% employer, 8% employee

• Health insurance: 10% employer

• Industrial Training Fund (ITF): 1% employer
  

If this feels like too much to manually calculate or file from abroad, this is exactly where an EOR like Betternship comes in, automating deductions and ensuring local compliance.

Step 5: Payment Options – How to Pay Employees in Nigeria

Once you’ve hired, the next step is getting your team paid efficiently.

Here are three main ways to pay employees in Nigeria:

1. Local Bank Transfers

If you have a Nigerian entity, you can pay salaries directly into employees’ Naira bank accounts. However, this requires a registered business presence and access to the Nigerian banking system.

2. USD Payments

For remote teams, many employers prefer paying in USD or stablecoins (USDT/USDC) due to exchange rate fluctuations. This is common in tech and freelance work, but must comply with Central Bank policies.

3. Employer of Record (EOR)

The easiest route for foreign companies. Platforms like Betternship handle salary payments, tax deductions, benefits, and payslips in local currency, without you needing a local entity or bank account.

This ensures:

• Employees get paid accurately and on time

• Compliance is maintained

• You save time and avoid exchange rate chaos
  

Step 6: Termination and Notice Period

Employment can be terminated by either party, but notice periods must be respected.

Here’s the standard guideline under Nigerian law:

• Less than 3 months of service: 1-day notice

• 3 months to 2 years: 1-week notice

• 2 to 5 years: 2 weeks’ notice

• 5+ years: 1-month notice
  

Alternatively, salary in lieu of notice may be paid.

There’s no mandatory severance pay, but many companies include it as a goodwill gesture or negotiate it in contracts.

Common Mistakes Foreign Founders Make

Even with the best intentions, many startups run into avoidable pitfalls when hiring in Nigeria. Here are the big ones:

1. Using U.S. or EU employment templates — Nigerian laws differ, and those contracts often miss key compliance clauses.

2. Paying via unregistered platforms or direct crypto — this can trigger compliance issues and block employees from tax documentation.

3. Misclassifying employees as contractors — to “save costs,” only to face retroactive tax bills.

4. Ignoring cultural context — local holidays, working styles, and expectations matter more than you think.

5. Underestimating FX impact — the exchange rate changes fast; paying in USD or through a compliant payroll system helps you stay ahead.

How Betternship Makes It Simple

If this all sounds like a lot to manage from abroad, that’s because it is. That’s why Betternship exists.

At Betternship, we help foreign founders hire, manage, and pay employees in Nigeria without setting up a local entity.

We handle:

• Local contracts and compliance

• Payroll and multi-currency salary payments

• Taxes, pension, and insurance deductions

• Offer letters, onboarding, and HR support
  

In short: you focus on your team, we handle the legal side.

You can post jobs, hire verified talent, and pay them globally, all through us..

How Much Does It Cost to Hire in Nigeria?

Let’s talk numbers.

On average, salaries for key roles in Nigeria look like this (as of 2025):

Costs depend on experience, company size, and whether you’re paying in USD or NGN.

Compared to U.S. or U.K. salaries, you can expect savings of 50–70% while maintaining high skill levels.

Hiring in Nigeria Made Easy

Hiring in Nigeria shouldn’t feel like walking through legal quicksand.

At Betternship, we help founders hire, onboard, and pay employees in Nigeria safely and easily.

From payroll to compliance, we’ve got you covered.

Ready to hire your first employee in Nigeria?

Get started here.

Frequently Asked Questions

• How to Hire and Pay Employees in Nigeria Without a Local Entity?

Use an Employer of Record (EOR) like Betternship. We handle compliance, contracts, payroll, and taxes for you.

• Can Foreign Companies Pay Nigerian Employees in USD?

Yes, but only through compliant channels. Most companies use global payroll platforms to handle exchange rates and legal compliance.

• What Is the Employer Tax Rate in Nigeria?

Employers contribute around 21% of gross salary toward pensions, health insurance, and social funds.

• How Long Is the Work Week in Nigeria?

Typically 40 hours per week, eight hours a day, five days a week.

• Do Nigerian Employees Get Paid Leave?

Yes. They receive 12 paid vacation days annually, plus public holidays.