If you’re considering expanding your company to Nigeria, you’ll have to consider your Nigeria payroll options. A key aspect of successful payroll setup and management is compliance with local laws.
G-P can make it easier and faster to expand into the country by streamlining the payroll setup process, including the complexities of assuring adherence to local laws.
Taxation rules in Nigeria
Both employees and employers are responsible for withholding taxes. Employees making over NGN 3,000 contribute 2.5% of their wages to the National Housing Fund. The country also has a pension scheme that employers and employees contribute to. Employers pay 10% of employee monthly emolument, and employees contribute at least 8% of monthly emolument.
Employers are also required to contribute 1% of the employee’s monthly gross salary towards Employee Compensation Scheme (ECS).
Nigeria payroll options for companies
Companies typically choose from 3 different payroll options:
- Internal: Subsidiaries that want to work in Nigeria long-term may institute internal payroll, but they need a bigger budget to hire a larger HR team with payroll expertise.
- Nigeria payroll processing company: If outsourcing works better for your company, you can choose to work with a local Nigeria payroll processing company. Your company will still need to learn all the country’s laws, however, for you to stay compliant.
- Employer of Record (EOR): Finally, you can opt for partnering with an EOR like G-P in Nigeria. G-P backs its platform with the largest team of HR and legal experts to ensure your payroll setup and management is compliant and accurate. That means you can focus on growing your global teams.
How to set up a payroll in Nigeria
Unless you’re working with an Employer of Record, you can’t set up your Nigeria payroll without first establishing a subsidiary. When you work with G-P, you can begin operations in Nigeria starting in just minutes, without needing to set up an entity first. G-P hires employees on your behalf and adds them to our locally compliant payroll, ensuring compliance every step of the way.
Entitlement/termination terms
Adding entitlement and termination terms to all your employment contracts can protect your company in the case of a termination. It’s best practice to do so before you choose a Nigeria payroll option. Employers have to provide written notice of dismissal and give employees an opportunity for defense. The country does not have any mandatory severance pay.
Streamline global payroll management with G-P.
G-P streamlines each step of the payroll management process with our market-leading global employment platform. Pay your team with confidence anywhere in the world in 150 currencies with our 99% on-time automated payroll system — all with just a few clicks. Our products also integrate with leading HCM solutions, syncing employee payroll data across platforms automatically to create one reliable, convenient source of truth for HR teams.
Contact us to learn more about how we can support you.