So you’ve finally launched your business—congratulations. The logo is ready, your services are clear, and you’ve started getting traction. Naturally, you need to expand, and that means hiring your first employee or team. But here’s what many new founders don’t realise: hiring isn’t just about finding someone who can get the job done—it’s about doing it right, legally.
Across Nigeria, many small business owners hire casually, relying on verbal agreements, WhatsApp chats, or simple handshake promises. “I trusted him,” one Lagos-based entrepreneur once told me, “until he sued me for wrongful termination.” The painful part? He lost. Not because he was wrong—but because he didn’t document anything.
Step One: Employment Contracts Are Not Optional
Every hire should come with a written employment contract. This contract must spell out job responsibilities, salary, work hours, benefits, probation periods, and termination procedures. Under the Labour Act, failing to provide this within three months of employment is already a breach.
Step Two: Understand Worker Classification
Is this person a full-time employee, an independent contractor, or a temporary worker? Misclassifying workers—especially calling someone a contractor when they should be on payroll—can lead to fines and backdated tax or pension liabilities. The Federal Inland Revenue Service (FIRS) and Pension Commission (PenCom) aren’t forgiving.
Step Three: Register with the Right Authorities
Once you start employing people, your business must register with:
Paye (Pay As You Earn) with your State Internal Revenue Service.
PenCom for employee pension deductions.
NSITF (Nigeria Social Insurance Trust Fund) for workplace injury insurance.
ITF (Industrial Training Fund) if you have five employees or more or annual turnover above ₦50 million.
Failing to comply with these obligations might seem harmless early on—but when a disgruntled employee reports you, penalties stack up quickly.
Step Four: Know the Boundaries
Discrimination is illegal. Whether it’s gender, religion, age, disability, or ethnicity, your recruitment process must be fair. This applies even if you’re hiring through informal networks. Also, respect privacy—do not demand irrelevant personal information or run background checks without consent.
Step Five: Build a Paper Trail
Always document performance reviews, disciplinary actions, promotions, or warnings. If you ever need to terminate someone’s appointment, your strongest defence is a file full of written records showing due process was followed. Courts don’t favour oral explanations—they want proof.
If you stay through the above, you are 95 percent out of legal battle. Let me give you an example, in 2023, an organisation I drafted an HR Policy for – a bakery owner in Abuja had to pay over ₦1.2 million in damages to a former employee he dismissed verbally after a disagreement. He had no contract, no records, and no legal support. The judgment? Unfair dismissal and breach of labour rights.
Hiring is not just about building a team; it’s a legal commitment. As a founder, you’re not just a visionary—you’re now an employer governed by Nigerian labour laws. Get the contracts right. Understand your obligations. And always protect yourself before problems arise.
Because in business, it’s not the lack of passion that sinks you—it’s the legal mistakes you didn’t see coming.
