Do you know the minimum wage in Nigeria? Are you aware of the benefits you must provide to stay compliant? These are key questions companies should know before expanding to Nigeria. Fortunately, G-P can help.
We’re a global EOR, and we help companies expand globally without setting up new entities. Our HR and legal experts will make sure you meet Nigeria’s compensation laws, so you can focus on your business.
Nigeria compensation laws
As of April 2019, the minimum wage in Nigeria is NGN 30,000 a month. Although you’re not required to give employees a 13th-month bonus, many companies do. Annual bonuses and performance-based bonuses are also common in Nigeria. All compensation and monetary benefits should be included in the employment contract.
Guaranteed benefits in Nigeria
When you start putting together your Nigeria benefits management plan, you should begin by including guaranteed benefits required by law. The country celebrates 11 national holidays for which employees are given the day off. After working a year for your company, employees should get 6 days of paid annual leave.
Expecting employees get 12 weeks of maternity leave at 50% of their usual pay.
Nigeria benefits management
After you’ve researched all of Nigeria’s statutory benefits, the next step is to incorporate additional benefits to boost talent retention and employee satisfaction. Some common benefits that employees may expect include the following:
- Pension plan
- Car allowance
- Mobile phone
- Annual bonus
- Performance-based bonus
- 13th-month bonus
Restrictions for benefits and compensation
Unfortunately, you can’t pay employees or offer benefits until you incorporate in Nigeria. Depending on the type of company, its location in Nigeria, and other factors, it could take weeks or months to incorporate, hire workers, add them to your payroll, and begin operations.
G-P can make it easier by eliminating this restriction. With us, companies can bypass entity setup and start working in days, not months.
Nigeria competitive benefits planning
Growing in a new country requires creating benefits packages that are compliant and competitive. When you begin employee benefits planning in Nigeria, you can research the labor laws and the market to make more informed decisions.
Nigeria employee benefits plans
The benefits you provide will directly impact the team you build in a new country, so it’s in your best interest to plan with care. The provisions you offer can encourage job seekers to apply for your vacancies during the recruitment process, making it easier to build a strong workforce.
After recruiting, your benefits can have a positive effect on morale at work. When employees feel cared for, they’re more likely to work hard and stay with your company — improving retention rates and reducing onboarding costs.
Benefits requirements in Nigeria
The labor laws require employers to provide minimum benefits for employee welfare. Companies need to offer the following provisions to remain compliant:
- Time off for public holidays
- Paid annual leave
- Maternity leave
- Pension fund contributions
- Paid sick leave
- Workman’s insurance
- Life insurance
National insurance contributions are also compulsory for companies in the public sector.
Designing Nigeria employee benefits plans
When designing a benefits plan in a new country, it’s essential to take the right approach. With the correct process, you can make a plan that considers both your financial abilities and the market standards.
1. Evaluate your finances and budget.
When you know how much revenue you’re bringing in, you can determine how much you’re able to spend on benefits. Staying connected to your finances will prevent you from overspending.
2. Research the market.
You’ll need to understand the market before you can compete in it. Research different companies in the area to find out what benefits are most commonly offered. These provisions will inform job seekers’ expectations.
3. Decide on benefits.
With the information you’ve gathered, you can decide on the provisions you want to offer. Use your research to address the market standards and keep track of your spending to stay within budget.
Average cost of benefits
Factors such as industry, size, and location can affect how much a company spends on employee provisions. With so much variation, a national average isn’t the best metric to guide your spending.
Instead, aim to set a budget unique to your revenue. One of the best ways to budget for benefits is to decide on a percentage of your income. When your company grows, your benefits will scale with you.
How to calculate benefits
The calculation process for employee benefits will vary depending on the provision. Allowances and bonuses are often straightforward calculations. You can set an amount to give to employees and distribute it evenly.
Other benefits come with a more complex process. For example, the required pension scheme requires contributions in percentages. Employees pay 8%, and employers pay 10%. You can find more guidance for calculating required benefits in the country’s labor laws.
How are employee benefits taxed in Nigeria?
Benefits are generally considered taxable income, but there are some exceptions to this rule. Relocation expenses and reimbursements supported by third-party receipts are not taxable.
Employee health benefits
It’s mandatory to provide healthcare to employees in Nigeria. Life insurance is also mandatory in Nigeria.
Partner with G-P to build your everywhere workforce.
As your partner in global expansion, G-P will handle payroll and compliance, so you can focus on growing your team and scaling your business. Our market-leading global employment platform is powered by the first fully customizable suite of global employment products and backed by the industry’s largest team of in-country HR and legal experts to streamline payroll management and help you offer competitive, compliant local benefits.
Learn more about our platform and request a proposal today.