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An offer letter and employment letter is a critical document that formalizes the employment relationship between you as an employer and your prospective employee in Nigeria. This document serves dual purposes: initially as an offer of employment outlining proposed terms, and upon acceptance, as a binding employment contract that governs the working relationship under Nigerian law.

When do you need this document?

You need this document whenever you're hiring new employees, promoting existing staff to new positions, or making significant changes to employment terms. It's essential when extending job offers to candidates, confirming permanent employment after probationary periods, or documenting salary increases and role changes. The document is also required when transferring employees between company locations or subsidiaries, ensuring all parties have clear written confirmation of the employment arrangement.

Key legal considerations

Your offer letter must include all mandatory employment terms required under Nigerian law. The compensation package should clearly outline base salary, allowances, and any performance-based payments, ensuring compliance with minimum wage requirements. Include detailed information about working hours, overtime policies, and leave entitlements as required by the Labour Act. The document must specify probationary periods, notice periods for termination, and disciplinary procedures. For companies with 15 or more employees, you must include pension scheme contributions under the Pension Reform Act 2014. Health insurance provisions are mandatory under the National Health Insurance Act 2021. Consider including confidentiality clauses, non-compete agreements where legally enforceable, and intellectual property provisions to protect your business interests.

Legal requirements in Nigeria

Under the Nigerian Labour Act Cap L1, your employment letter must contain specific mandatory elements. You must clearly state the employee's full name, position title, job description, and reporting structure. Include the exact start date, work location, and any probationary period not exceeding six months. Specify working hours, which cannot exceed eight hours per day or forty hours per week without overtime compensation. Detail all forms of remuneration including basic salary, housing allowance, transport allowance, and any other benefits. Include annual leave entitlements of at least six working days after twelve months of continuous service, sick leave provisions, and maternity leave rights. For organizations with 15 or more employees, include pension contributions at 18% of monthly emolument (10% employer, 8% employee). Ensure the document references compliance with the National Health Insurance Scheme and Workers' Compensation Act. The letter should be signed by an authorized company representative and include provisions for contract modification only through written agreement.