Do you know the minimum wage in Nigeria? What about the benefits you must provide to stay compliant? If you don’t know the answer to these questions, you may have trouble sourcing compensation and benefits for your team. Fortunately, Globalization Partners can help through Nigeria compensation and benefits outsourcing.
We’re a global PEO with subsidiaries around the world, and we can use those subsidiaries to help you expand faster. Our experts will make sure you meet Nigeria’s compensation laws, and we’ll add your employees to our benefits management plan. With Nigeria compensation and benefits outsourcing, you can rest assured that your company is taken care of.
Nigeria Compensation Laws
Nigeria recently increased its minimum wage as part of the country’s compensation laws. The minimum wage was 18,000 NGN a month in 2018 but is now 30,000 NGN a month as of April 2019. 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 an 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 you should give employees a day off. After working a year for your company, employees should get six days of paid annual leave.
Female employees get 12 weeks of maternity leave that’s 50% of their usual pay. Since Nigeria is made up of different states, maternity and paternity leave can vary by state. For example, Lagos and Enugu offer paid paternity leave at two weeks and three weeks respectively. Other states in Nigeria do not offer any paid paternity leave.
Nigeria Benefits Management
After you figure out all of Nigeria’s statutory benefits, you can keep employees happy by dispersing additional benefits as well. Some common benefits that employees may expect include the following:
- Pension plan
- Dental benefits
- Life insurance
- Stock options
- 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 get to work.
Globalization Partners will make it easier by eliminating this restriction. We allow companies to use our existing subsidiary to incorporate and start working in as little as a day. Our goal is to take the burden of compliance off your shoulders and onto our own so that you can focus on growing your company instead of worrying about legal matters.
Nigeria Competitive Benefits Planning
Growing in a new country will involve 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.
About your Nigeria employee benefits plans
Your benefits will directly affect 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 limiting the need for onboarding costs.
Possible fringe benefits can include:
- Annual and 13th-month bonuses
- Transportation allowances
- Health insurance
- Meal vouchers
Benefits requirements in Nigeria
The labor laws require employers to provide minimum benefits for employee welfare. You need to offer the following provisions to keep your company 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 your 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 percent, and employers pay 10 percent. You can find more guidance for calculating required benefits in the 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
Employers in the public sector are responsible for national insurance contributions that fund Nigeria’s healthcare system. This requirement is not applicable in the private sector. Many people rely on private insurance to cover the costs of care. Employers are not required to provide supplemental health insurance, but they may choose to do so.
Work with Globalization Partners to build your global team
Globalization Partners’ global employment platform helps you build and scale an international team quickly and easily, ensuring all benefits offered to candidates are compliant and in line with local regulations. Contact us today to learn more.
THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). G-P does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect G-P’s product delivery in any given jurisdiction. G-P makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.