AI agents for business finance: what they can and can't do
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The short answer
When you hire your first employee in Nigeria, give them a written statement of their terms within three months of starting, as the Labour Act requires; pay at least the ₦70,000 national minimum wage where it applies; register to deduct and remit PAYE; and check your pension, NHF, NSITF and ITF obligations. Keep wage records, agree notice periods and leave in writing, and pay on the same date every month.
Before you hire: can you afford it?
A salary is a fixed cost that continues in slow months. Before offering a job, add the full monthly cost (pay, statutory contributions, equipment, data, transport allowance) to your cash flow forecast for at least three months. If the hire will bring in revenue, estimate how long before it covers its own cost.
Employee or contractor?
If you control when, where and how the person works, provide the tools and expect them to work only for you, they are likely an employee, whatever you call them. A contractor runs their own business and is paid by the job. Employment brings legal duties; choose the right arrangement rather than labelling an employee a contractor to avoid them.
The written contract
Section 7 of the Labour Act requires an employer to give a worker a written statement of terms not later than three months after the start of employment. It should include:
- Names of employer and worker, and the worker's address.
- The nature of the job.
- If fixed-term, the date the contract ends.
- Notice required from each side.
- The rate of pay, how it is calculated, and when it is paid.
- Terms on hours of work, holidays and sick pay.
- Any special conditions.
Give it on day one, not at month three. It prevents most disputes.
Minimum standards in the Labour Act
| Topic | Minimum under the Labour Act |
|---|---|
| Notice: employed 3 months or less | One day |
| Notice: over 3 months, under 2 years | One week |
| Notice: 2 years to under 5 years | Two weeks |
| Notice: 5 years or more | One month |
| Annual paid holiday | At least six working days after 12 months' continuous service |
| Sick pay | Up to 12 working days' pay in a calendar year for certified temporary illness |
These are minimums. Your contract can be more generous, and many employers offer longer notice and more leave to attract good staff.
Pay: the minimum wage
The National Minimum Wage (Amendment) Act 2024 set the national minimum wage at ₦70,000 a month. Legal commentary notes exemptions, including establishments with fewer than 25 employees, part-time workers paid by commission or piece-rate, and some seasonal workers. Even if an exemption applies to you, ₦70,000 is a useful floor for attracting and keeping staff. The Act also requires wage records to be kept for three years, with fines for breaches.
Tax and statutory deductions
- PAYE. Deduct personal income tax from salaries and remit it to the state tax authority where the employee lives. Employees earning ₦800,000 or less a year are exempt under the 2025 reforms. See PAYE tax bands for 2026.
- Pension. Check whether the contributory pension scheme applies to your headcount and the rates; see pension contributions in Nigeria.
- NHF, NSITF and ITF. Other payroll obligations depend on your size; see NHF, NSITF and ITF explained.
- Employer's annual return. Under the Nigeria Tax Administration Act 2025, employers file an annual return of employees' emoluments by 31 January.
Example: monthly cost of a first hire
Example only. A pharmacy hires a sales assistant at ₦120,000 a month gross. Her annual pay is ₦1,440,000; after reliefs, her taxable income determines PAYE under the bands, which the employer deducts and remits. The owner budgets ₦120,000 plus any employer pension contribution that applies, a ₦10,000 transport allowance and a uniform, and sets payday as the 25th.
Practical first-hire checklist
- Write a short job description and the pay range before advertising.
- Check identity, references and, where relevant, qualifications.
- Issue the written contract and a simple staff handbook (hours, leave requests, conduct).
- Collect the employee's NIN, Tax ID, bank details and pension details.
- Pay by bank transfer on a fixed date and give a payslip.
- Keep wage and attendance records.
Probation and ending employment
Many employers use a probation period, often three to six months, to confirm the hire works out. Write the length and the notice during probation into the contract. If things do not work, follow your contract and the Labour Act notice periods, pay what is owed up to the last day, and put the reasons in writing. Calm, documented processes protect both sides.
Keep a short file for each employee: contract, identification, Tax ID, bank and pension details, leave records and any warnings. Wage records must be kept for three years under the minimum wage law, and payroll records also support your tax filings.
Finally, set aside time in the first week to train your new hire properly. A clear induction, written routines and a named person to ask questions shorten the time before the hire is productive and reduce early mistakes.
Where Pryme fits
A Pryme Business Account supports payroll, and the Finance agent can prepare each month's pay run for you to check and approve before money moves; actions are recorded. For staff outside Nigeria, see our payroll guide for Nigeria, Ghana and Kenya.
Questions people ask
What is the minimum wage in Nigeria in 2026?
The National Minimum Wage (Amendment) Act 2024 set it at ₦70,000 a month. Commentary notes exemptions, including establishments with fewer than 25 employees.
Do I need to give my employee a written contract in Nigeria?
Yes. The Labour Act requires a written statement of terms within three months of the start of employment.
How much annual leave must I give staff in Nigeria?
Under the Labour Act, at least six working days of paid holiday after 12 months of continuous service.
Do small businesses deduct PAYE in Nigeria?
Yes. Any employer must deduct and remit PAYE on employees' pay, regardless of the business's own tax position.
Sources
- Labour Act, Laws of the Federation of Nigeria (PLAC) · accessed Oct 2026
- Mondaq: National Minimum Wage (Amendment) Act 2024, key updates for employers · accessed Oct 2026
- Nigeria Tax Administration Act 2025 (Gazette copy) · accessed Oct 2026
- Govt highlights 50 tax reliefs and exemptions for low-income earners and SMEs (AllAfrica) · 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.