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The short answer
An employer of record (EOR) is a firm with its own Nigerian entity that legally employs your Lagos hire, runs Nigerian payroll, PAYE and statutory deductions, and bills your UAE company a service fee. There are two contracts: a service agreement between your company and the EOR, and an employment contract between the EOR and the worker. It suits a few hires or a test of the market; Remote's pricing page (24 Oct 2026) starts EOR at $599 per employee per month.
What an employer of record actually does
A UAE company that wants to employ someone in Nigeria has three options: set up a Nigerian subsidiary, engage the person as an independent contractor, or use an employer of record. The EOR route borrows someone else's Nigerian entity. The EOR is the legal employer; you direct the day-to-day work.
In practice an EOR usually handles:
- the Nigerian employment contract, written to local law;
- monthly payroll in naira, with PAYE and pension deducted and remitted;
- statutory employer registrations such as NSITF and ITF where they apply;
- leave records, payslips and the end-of-year employer return;
- termination paperwork, done in line with the contract and the Labour Act.
DLA Piper Africa's payroll FAQ (28 August 2026) notes that employers convert foreign-currency pay to naira at the CBN rate at payment to work out PAYE and other statutory deductions. That conversion, and the filing that follows, is the core of what you pay an EOR for.
The two contracts
| Contract | Between | Points to check |
|---|---|---|
| Service agreement | Your UAE company and the EOR | Fee per employee, deposit, currency and invoicing, data protection, liability caps, who owns work product, notice to end the service |
| Employment contract | The EOR's Nigerian entity and the worker | Labour Act particulars, pay, leave, notice, and a clause assigning intellectual property onward to your company |
The intellectual property chain is the clause most often missed. The worker creates code, designs or content for the EOR as legal employer; the service agreement must pass ownership to your UAE company. Read both documents together. For what the employment contract itself should contain, see employment contracts for Nigeria staff.
When an EOR fits, and when it does not
| Situation | EOR | Subsidiary | Contractor |
|---|---|---|---|
| One to a few hires, testing Nigeria | Usually fits | Too much set-up | Only if they are truly independent |
| Team selling to Nigerian customers | Check PE position | Usually fits | High misclassification risk |
| You need to sign contracts or invoice in Nigeria | Does not solve it | Fits | Does not solve it |
| Long-term team of ten or more | Costs add up | Usually fits | Not suitable |
An EOR solves the employment problem, not every tax problem. If your Lagos staff primarily serve Nigerian customers or conclude contracts for you, the taxable presence question still arises for your UAE company; PwC's corporate residence summary (reviewed 29 May 2026) sets out the tests. See permanent establishment risk.
The contractor route is cheaper on paper. Adeola Oyinlade & Co (18 June 2026) notes that Nigerian courts weigh control, integration, economic reality, mutuality of obligation and exclusivity, and that a reclassified worker may claim Labour Act notice, leave and sick pay and bring a claim at the National Industrial Court. See contractor or employee.
Cost: compare like with like
EOR providers publish prices in dollars per employee per month, on top of salary and statutory costs. Remote's pricing page (generated 24 October 2026) lists EOR from $599 per employee per month. Other providers price differently, and deposits, onboarding fees and currency conversion margins vary. Ask each one for a full monthly cost for a named salary: fee, employer statutory contributions, and how they convert your dirhams or dollars into naira.
Statutory items to confirm with the EOR
Ask the EOR to list, in writing, every Nigerian statutory cost it will run for your employee and which of them you pay on top of the fee. PwC's Nigeria summary (reviewed 29 May 2026) says pension is mandatory for employers with 15 or more employees, at a minimum of 18% of monthly emoluments (10% employer, 8% employee), and that NHF contributions are no longer required of private-sector employees. The EOR's own headcount, not yours, may decide whether pension is mandatory, so ask how it treats this. Ask too about NSITF and ITF; see NSITF and ITF for Nigerian staff.
Moving off an EOR later
Many companies use an EOR for a year or two and then set up a Nigerian subsidiary once the team grows. Plan for that from day one: check whether the service agreement charges a conversion fee when employees transfer, how accrued leave and service length carry over, and whether the worker must sign a new contract. Continuity of service matters for Labour Act holiday entitlement, which depends on 12 months' continuous service.
What to check first
- Confirm the EOR has its own Nigerian entity, rather than subcontracting to a local partner you have not met.
- Ask for a sample Nigerian payslip and proof of PAYE and pension remittance for an existing client employee, anonymised.
- Read the IP assignment and confidentiality chain end to end.
- Agree how and when you fund payroll, and in what currency.
- Check the notice period to leave the EOR and how employees move to your own entity later.
Where Pryme fits
If you later move staff onto your own Nigerian entity, a Pryme Business Account holds naira and dollars together and runs payroll, with the Finance agent preparing each run for a person to approve.
Questions people ask
What is an employer of record in Nigeria?
A provider with its own Nigerian entity that legally employs your worker, runs payroll and statutory deductions, and charges your company a monthly fee.
How much does an employer of record cost for Nigeria?
Prices vary by provider. Remote's pricing page lists EOR from $599 per employee per month as at 24 October 2026, on top of salary and statutory costs.
Does an employer of record remove permanent establishment risk?
Not by itself. If staff primarily serve Nigerian customers or conclude contracts for you, your UAE company may still have a taxable presence.
Who owns the work an EOR employee creates?
The EOR as legal employer, unless the employment contract and the service agreement pass ownership to your company. Check both.
Sources
- Remote: Pricing (generated 24 Oct 2026) · accessed Oct 2026
- DLA Piper Africa: FAQs on payroll taxes and employer liability in Nigeria (28 Aug 2026) · accessed Oct 2026
- PwC Worldwide Tax Summaries: Nigeria, corporate residence (reviewed 29 May 2026) · accessed Oct 2026
- Adeola Oyinlade & Co: worker misclassification in Nigeria (18 Jun 2026) · accessed Oct 2026
- PwC Worldwide Tax Summaries: Nigeria, individual other taxes (reviewed 29 May 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.