Nigeria is a great place to hire from, with a labour force of almost 80 million people and a reputation for diligence and perseverance. However, before hiring Nigerian employees, it is important to understand the labour laws that govern employee compensation and benefits.
Nigeria upholds a set of mandatory employee benefits that help employers ensure legal compliance and help you create an appealing work environment for employees.
In Nigeria, any employed individual, including citizens and foreign nationals working in the country, is entitled to employee benefits. However, there is an important distinction between workers and employees with both groups being eligible for certain benefits as stipulated by Nigerian labour laws.
“Workers” are defined under the Labour Act as “...employees who perform manual labour or clerical work.”
“Employees” or “Non-Workers” are those “who perform administrative, executive, technical, or professional functions.
Statutory or mandatory employee benefits are those legally mandated by the government, ensuring fundamental protections and entitlements for the workforce. These benefits are enshrined in Nigerian labour laws, outlining the minimum standards that employers must adhere to.
Nigeria's legal framework includes multiple laws and statutes that establish the foundation for employee benefits nationwide. These laws govern various aspects of benefits, from minimum wage to health insurance, shaping the obligations and rights of both employers and employees.
Nigeria mandates several crucial benefits under its various laws and statutes. These include minimum wage and working hours, paid time off, parental leave, pension, and health insurance.
Nigeria’s National Minimum Wage Act of 2019 stipulates a minimum wage of ₦30,000 per month for full-time employees at organisations with over 25 employees.
A work week in Nigeria is set at a maximum of 48 hours over 5 days, with defined hourly limits for overtime work and corresponding compensations. A workday in Nigeria is 8 hours and employees are entitled to a 1-hour break every 6 hours.
The mandatory minimum wage and regulated working hours are fundamental pillars of Nigeria's labour laws.
Employees are entitled to a minimum of 6 days of paid annual leave after completing 12 months of employment. Additionally, sick leave extends to 12 days annually, requiring valid medical certification for compensation. This provision aims to ensure the well-being of employees and their right to adequate rest and recovery.
Employees must also enjoy paid leaves during the 11 public holidays declared as paid work holidays by the Nigerian government.
Women working in the public sector must be granted at least 16 weeks of maternity leave, while those in the private sector are entitled to 12 weeks. Maternity leave can start up to 6 weeks before birth and employees must receive at least 50% of their regular salary.
Different regions in Nigeria provide varying paternity leave entitlements, showcasing a recognition of the need for parental support and work-life balance. For example, in Lagos and Enugu, new fathers get up to 2-3 weeks of paternity leave.
Under the Pension Reform Act, both employers and employees contribute to pension funds. The employer contributes 10% of the employee’s salary, while the employee contributes 8%. These contributions ensure retirement savings for employees, enhancing long-term financial security.
As an employer, you are also required to make contributions to social security and other mandatory funds.
For example, under the Employee Compensation Act of 2010, you must contribute 1% of your total monthly payroll to the Employee Compensation Fund to assist employees or their dependants in the case of work-related injury, disability, disease, or death.
You must also provide group life insurance for Nigerian employees worth at least 3 times their annual salary.
Under the National Health Insurance Act of 2022, health insurance is a mandatory provision for all Nigerian employees at organisations with more than 5 employees. This means that as an employer, you must provide health insurance to your Nigerian employees. One easy way to provide health benefits to your Nigerian employees is through an employee benefit platform like Motherboard, which aggregates health insurance from over 10 major HMOs across the country.
In addition to mandatory benefits, there are certain supplementary benefits you may offer to your Nigerian employees. While these are not required by law, they are necessary to help you attract and retain top talents, while motivating them and increasing their productivity.
A great way to improve employee morale is by giving out performance bonuses that reward employees for productivity. While not mandatory, some companies also provide a “13th-month salary” to cater for the increased cost of items during end-of-year holidays.
This is an increasingly popular benefit, especially among Nigerian startups. Stock options are typically given to employees who have spent some time at a company (typically a minimum of 1 year) so they can enjoy returns on company profits. This is done to boost employee retention and motivate productivity.
Learning & Development benefits are the best way to upskill your employees while keeping them motivated – it’s a win-win for everyone involved. You can provide these benefits by paying for courses for your employees, organising workshops, or purchasing relevant books for them.
A recent report by Piggyvest showed that the biggest personal expense for 87% of Nigerians in 2023 is food & groceries. When you consider that food inflation in Nigeria reached 30.64% in September 2023, the situation becomes even dire.
With food costs increasingly high, you can vastly improve employee retention and ease the cost of living for your employees by providing food & grocery benefits for them. If you’re not sure where to start, employee benefit platforms like Motherboard are a great start with multiple food & grocery vendors all over the country.
In May 2023, the Nigerian government removed the subsidy on petroleum products, causing an over 100% increase in the cost of transportation and fuel across the country. This has led to an increased cost of living for many employees, and many organisations have switched to remote work to ease the situation for their employees.
You can further improve the situation for your workforce by providing them with fuel vouchers from over 4000 filling stations on Motherboard. This helps on-site employees who have to commute to work, remote employees who have to use power generators in place of unstable electricity, or drivers who have to make deliveries.
With remote work on the rise, there’s a need to provide Work From Home benefits to improve productivity for your employees. Employee benefits platforms like Motherboard let you provide your employees with WFH benefits, ranging from home office furniture, work gadgets, electricity units, and internet data.
There are 3 ways you can provide employee benefits for your Nigerian employees.
In conclusion, Nigerian labour laws mandate essential benefits for employee welfare and rights. As an employer, you must provide mandatory employee benefits and, if possible, boost with supplementary benefits. This helps you foster a positive work culture, retain top talent, and increase employee morale and productivity.
Employee benefits platforms like Motherboard can help you stay compliant with employee benefits like health insurance while allowing you to provide supplementary benefits like food & groceries, energy, and much more.
