Economic Overview, Silicon Lagoon FinTech Capital & Oil Superpower
Lagos is Africa's top venture capital and tech unicorn capital, driving continental mobile payments, software engineering, and oil exports.
Key Economic Clusters
- FinTech & Software Engineering ("Silicon Lagoon"): Mega-scale fintech payment processors (Flutterwave, Paystack, Moniepoint) and software development in Yaba and Victoria Island.
- Oil, Gas & Petrochemicals: Dangote Petroleum Refinery (world's largest single-train refinery) and offshore deepwater crude extraction.
- Creative Economy & Media: Nollywood global film streaming and global Afrobeats music industry.
Employment Contracts, Nigerian Labour Act & Probation
Regulated by the Labour Act (Cap. L1 LFN 2004) and common law.
- Written Statement of Terms: Mandatory within 3 months of commencement, drafted in English.
- Probation Period: Typically 3 to 6 months based on contractual agreement.
Working Hours, Overtime & Rest Periods
- Standard Hours: 40 hours per week (8 hours/day over 5 days).
- Overtime: Compensated with contractual hourly overtime premiums as specified in employment contracts or collective agreements.
Annual Paid Leave, Public Holidays & Maternity Protections
- Annual Paid Vacation: Statutory minimum of 6 working days under the Labour Act (with 15 to 20+ working days standard commercial practice in technology and professional services).
- Public Holidays: ~11 to 13 official national public holidays (Christian, Islamic, and national days).
- Maternity Leave: 12 weeks (84 days) (6 weeks prenatal + 6 weeks postnatal) paid at a minimum of 50% basic wage (100% paid leave is standard in tech).
Pension Reform Act (10% Er / 8% Ee), NHIA Health & State PAYE
| Statutory Scheme | Employer Share | Employee Share | Description |
|---|---|---|---|
| Pension Reform Act 2014 (PRA) | 10.00% | 8.00% | Mandatory retirement fund to PenCom licensed PFA (18% total) |
| Industrial Training Fund (ITF) | 1.00% | 0.00% | Vocational training fund for employers with >= 5 staff |
| Employees' Compensation (NSITF) | 1.00% | 0.00% | Workplace accident and rehabilitation insurance |
| National Housing Fund (NHF) | 0.00% | 2.50% | Federal Mortgage Bank of Nigeria housing fund |
| Total Statutory Contributions | 12.00% | 10.50% | Total monthly statutory payroll deductions |
Personal Income Tax (PAYE): Progressive rates: 7% (first N300k), 11% (next N300k), 15% (next N500k), 19% (next N500k), 21% (next N1.6M), and 24% on taxable income over N3.2M/yr (with Consolidated Relief Allowance - CRA), remitted monthly to State IRS (e.g. LIRS in Lagos).
Termination, Notice Periods & Redundancy Principles
- Notice Periods: 1 day (< 3 mo service), 1 week (3 mo–2 yr), 2 weeks (2–5 yr), and 1 month (>= 5 yr service).
- Redundancy Principles: Strict Last-In, First-Out (LIFO) principle applies in redundancy dismissals under Section 20 of the Labour Act.
Why Use an Employer of Record (EOR) in Nigeria
- Immediate Access to 100k+ Tech Engineers: Onboard software developers, data scientists, and product managers in Lagos in days.
- PenCom, LIRS & NSITF Compliance: Automated management of 10% employer pensions, State PAYE tax deductions, and training levies.
- Expatriate Quota & CERPAC Residence Sponsorship: EOR manages Ministry of Interior Expatriate Quota approvals and CERPAC green cards.
Hiring in Nigeria? Key Resources
Whether you are evaluating entity setup vs. using an Employer of Record, or looking for the best international payroll solution, our guides give you transparent benchmarks: