Professional Employer Organization (PEO) in Nigeria

What is a professional employer organization (PEO)?

One way to assist in the employment process of remote workers is to use a professional employer organization (PEO). A PEO partners with an employer to assist in HR services, including

  • Recruitment
  • Onboarding
  • Benefits
  • Payroll
  • Compliance

This type of co-employment or HR outsourcing can benefit employers that don’t know local laws outside of their country. The client-company and the PEO share responsibility and liability for the remote employee. Also, the employer can keep their HR control while still receiving support to remain compliant.

So, you're considering doing international business in Nigeria, it makes sense. Nigeria is an up-and-coming market. It has the top economy in Africa and a growing educated population. Each year, more of the country is gaining access to the internet, which opens it up to remote work opportunities.

Nigeria’s laws and regulations can be confusing to the untrained person. It has unique tax requirements and statutory benefits that may separate it from other countries you have worked in. To avoid compliance risks, consider using a PEO in Nigeria to hire talent and manage payroll.

What are the benefits of using a PEO in Nigeria?

A professional employer organization in Nigeria can offer comfort if you don’t have your own legal expert in international laws. Benefits of using a PEO in Nigeria include:

  • Ensuring Nigerian employment law compliance. If you work with a PEO, they may provide expert legal advice on local employment laws. They should shield your company from compliance penalties or fines.
  • Processing payroll, including tax filing. A significant benefit of partnering with a PEO is that they can manage the payroll process. This includes calculating the necessary deductions, like income taxes, and ensuring that your employees are paid accurately and on time.
  • Minimizing risk. When you work with a PEO, it mitigates some of the potential risks that could occur. Taxes can otherwise be filed incorrectly, or a company could miss a Nigerian employment law that could lead to penalties. PEOs take on the management of these risks as co-employer.
  • Offering competitive benefits packages. As a global agency, a PEO should know the standards that a Nigerian employee would consider important. The PEO can arrange comprehensive health insurance and other valuable employee benefits.
  • Decreasing employment costs: If you partner with a PEO, they can reduce employment costs. They can plan the optimal employment process for Nigerian employees.

Skuad is one such PEO in Nigeria that can use its expertise to hone your HR processes. They will ensure compliance with Nigerian law so that you can concentrate on expanding your business.

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What are the differences between an EOR and a PEO?

You may have heard the term employer of record (EOR) in conjunction with PEO. These two HR outsourcing arrangements are similar but not interchangeable. They both partner with companies that hope to expand their remote teams anywhere in the world. Yet, they are notably different in their approach. To choose which arrangement is better for your business, take a look at the helpful table below.

Considered a legal representative of an employer and, as such, held legally liable to manage employment services by hiring, onboarding, and paying employees and independent contractors for an employer Only liable to employers insofar as agreed-on conditions included in service contract state and, as such, bears no legal responsibility for — and is not considered a legal representative of — employers when carrying out any agreed-on HR functions
Strategizes HR functions end to end and, in doing so, exercises more control over employees and independent contractors in all outsourced HR functions Is limited to functional, as opposed to strategic, levels of managing and providing HR functions and, as such, has much less control over employees and independent contractors
Brought in because of extensive legal expertise and service network to manage employment services in multiple jurisdictions Hired because of niche expertise in one or a few labor markets and, as such, has limited expertise (and value) when employers expand into more markets
Crafts end-to-end contracts as part of an integrated employment service and, as such, is held fully liable for each HR activity provided under service contract Does not usually handle contract drafting or agreements, leaving contracting matters to client organizations

With these distinctions in mind, your company can make an informed decision when choosing between a PEO or EOR for their Nigerian HR processes.

Hiring in Nigeria with a PEO

Nigeria has come a long way in growing its economy and protecting its workers. That is why the government enacted employment laws: to shield employees from employer manipulation. Some of these regulations are

It can be time-consuming to take on the responsibility of hiring a Nigerian employee. You will need to meticulously comb through the employment laws. However, it is worth it.

As of 2022, Nigerians are one of the top nationalities to hire as global remote workers. Nigeria as a whole benefits from companies taking a chance on remote workers, in the diversification of the Nigerian economy and the incentive for skilled workers to remain in the country and educate others.

Skuad understands the struggles as well as the benefits of hiring in Nigeria. Our PEO service can create a solid foundation. Skuad will manage employee compensation, tax deductions, and compliance without the need for concern.

Payroll in Nigeria is challenging. It’s easy when you use a PEO.

The difficulties of calculating payroll in Nigeria start from the moment you hire an employee. First, you need to sort out your company registration in Nigeria. You also need to know that employment is separated into two groups in Nigeria:

  • Workers. Manual laborers and clerical workers
  • Employees. Skilled hires with additional training or education, like those who perform professional or technical duties

Different laws and statutory requirements protect each group in Nigeria, such as regulating their minimum wage. Employers must also be aware of maximum work hours, overtime pay, and statutory leave before employees start working.

When it comes time to calculate payroll, the payroll team must know the proper deductions that they should take out of the employees’ wages each month. To do this, they must understand how to calculate the gross salary, net salary, taxable income, deductions, and more. Some of the employee deductions in Nigeria are

  • Social security. 8%
  • Value-added tax (VAT). 7.5%
  • Income tax. A range of 7% to 24% depending on the employee’s taxable income

After the calculations are complete, you will need to create payslips, pay the employees, and send the deductions to the proper agencies. Keep in mind that this is just the employee side of payroll. It does not yet include employer deductions.

It is vital that all aspects of your payroll are completed accurately. If not, it can have several effects, including but not limited to government penalties and frustrated employees. The Nigerian government may fine you or place other penalties on you if they find you're non-compliant. Your employees may be understandably upset if their paycheck is delayed or has the incorrect amount. Incorrect payroll processes are not worth these risks.

A reputable PEO like Skuad can ensure this does not happen. Our Nigerian experts provide 100% compliance with local laws. Skuad has a unified platform that will seamlessly calculate and process your company’s payroll. If you want to see how we can help your business, book a demo with Skuad today.

What a PEO in Nigeria can and cannot do for you

It could be a concern to allow another company access to your HR processes. It’s understandable to weigh your options before you take that leap of faith with a professional employer organization. Here is a list of some of the HR functions that a PEO in Nigeria can and cannot do.

A PEO can:

  • Assist with the recruitment, hiring, and onboarding of new employees in Nigeria
  • Maintain accurate payroll management and processing, including salary, benefits, and deductions
  • File the proper tax deductions with the appropriate government agencies
  • Lower the necessary overhead costs related to employment while also lowering Nigerian hiring risks by ensuring compliance

A PEO cannot:

  • Establish itself as the only legal employer of your company
  • Obtain control over your business at all levels
  • Proceed as the sole decisionmaker when it comes to hiring and terminating employees

Businesses big and small can find value in partnering with a PEO in Nigeria.

It can be a hassle to hire global remote workers. You have to find a way to broaden your recruitment process. Then, after you have hired someone in Nigeria, it is a long and tedious process to comply with local labor laws. It is also a process that, if you don’t get correct, can negatively affect your company and employees.

Your HR team must be diligent, and not all businesses, especially not smaller startups, can ensure this. However, no business should have to limit their talent pool because they don’t have as large of a bandwidth.

Partnering with a professional employer organization in Nigeria could expand your hiring limits. The PEO will focus on compliance for your Nigerian hiring, payroll, and benefits. That way, you can attend to the bigger picture: growing your business.

Skuad’s unified platform can be this PEO in Nigeria. We offer a partnership in which we focus on all your HR processes from the hiring process to payroll. Learn more about Skuad’s PEO service to see if it is the right fit for you.

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