Contractor or employee? What it means when a foreign company hires you from Nigeria
When a foreign company hires you from Nigeria, you're either a contractor who invoices them and handles your own tax and benefits, or an employee through an employer of record such as Deel, Remote or Oyster, which runs Nigerian payroll for you. The same monthly figure is worth different amounts under each, so know which one you're signing.
By Chiamaka Obi, Pay and contracts writer
Updated 8 min read
In short
- A foreign company can hire you from Nigeria in two main ways: as a contractor who invoices them, or as an employee through an employer of record (EOR) such as Deel, Remote or Oyster.
- As an EOR employee you get Nigerian payroll: PAYE deducted, pension, health insurance and leave. EOR salaries in Nigeria are paid in naira by default, so don't assume dollars.
- As a contractor you're usually paid the full amount in dollars, but you handle your own tax, pension, leave and health cover. Price that in before you agree a rate.
Neither option is a trick, and both are common. What matters is that you know which one you're being offered, because the same monthly figure is worth very different amounts under each.
The three ways you might be hired
| Direct contractor | Contractor through a platform | Employee through an EOR | |
|---|---|---|---|
| Who you work for, legally | Yourself, with a contract with the client | Yourself; the platform handles contracts and payments | The EOR's Nigerian entity |
| How you're paid | Invoice, usually in dollars, pounds or euros | Through Deel, Remote, Oyster or similar, then you withdraw | Monthly payroll, in naira by default |
| Tax | You self-assess with your state IRS | You self-assess with your state IRS | PAYE deducted before you're paid |
| Pension and health insurance | Only if you arrange them | Only if you arrange them | Included, as Nigerian law requires |
| Paid leave | None, unless the contract says so | None, unless the contract says so | As in your contract, at least the legal minimum |
| Ending the work | Whatever the termination clause says | Whatever the termination clause says | Notice under your contract and Nigerian law |
What an employer of record is
Deel describes an employer of record as "an organization that employs and pays your workers compliantly on your behalf." The foreign company decides your work and manages you day to day. The EOR is your legal employer in Nigeria: it issues the employment contract, runs payroll, deducts tax and pays your pension and insurance.
Deel, Remote and Oyster all employ people in Nigeria this way. For the company it costs real money: EOR plans start at $599 a month per employee with Deel and with Remote, and Oyster lists $699. Managing a contractor costs far less: from $49 a month with Deel and from $29 with Remote and Oyster. That price gap is one reason so many first offers to Nigerians are contractor offers.
An EOR job doesn't automatically mean a dollar salary
This catches a lot of people out. Deel, Remote and Oyster all list the Nigerian naira as the payroll currency for Nigeria. Your offer may be quoted in dollars, but the payslip and the money may be in naira.
There is an exception. Remote's help centre lists Nigeria among the countries where an EOR salary can be "denominated and paid in USD", as an option the company pays an extra $50 a month per employee for. Even then, Remote says the payslip shows gross pay and deductions in local currency.
So ask directly: what currency is my salary set in, what currency is it paid in, and if it's naira, what exchange rate is used and when? If it matters to you, read our guide on receiving dollar payments in Nigeria before you answer.
What you get as an EOR employee in Nigeria
- Pension. Under the Pension Reform Act, the minimum is 10% of your monthly emolument from the employer and 8% from you, paid into your retirement savings account with a pension fund administrator.
- Health insurance. Remote says it is mandatory for employers in Nigeria to provide health insurance to employees, and Deel lists private health cover as mandatory in its Nigeria package.
- Employee compensation. Employers pay 1% of payroll into the employees' compensation fund (NSITF), which covers injury at work.
- Tax handled. PAYE is deducted before you're paid. You still file a yearly return; see tax for remote workers in Nigeria.
- Leave. Remote's Nigeria guide lists 12 sick days a year and 12 weeks' maternity leave, and notes that federal law doesn't guarantee paternity leave.
One honest caveat. The Labour Act's minimums (such as at least six working days of annual leave after 12 months, and set notice periods) apply to "workers", which the Act limits mainly to manual and clerical staff. Lawyers at Banwo & Ighodalo and Deloitte's employment guide both note that administrative, technical and professional staff are governed largely by their contracts. For most remote tech and office jobs, your leave and notice are whatever your contract says, so read it.
The National Housing Fund deduction of 2.5% is, according to PwC, no longer compulsory for private-sector employees, so don't be surprised if it's missing from your payslip.
What being a contractor really means
As a contractor you sell a service, not your time as an employee. Deel's guide on misclassification describes employees as people who work to "a company-regulated schedule", "receive direct supervision" and "typically work for a single employer". Contractors are meant to have more control over how and when they work.
In practice, many Nigerian contractors work full-time for one company, on its hours, in its Slack. That's common and not your problem to fix, but you should understand the cost of it:
- no pension unless you pay into one yourself;
- no paid leave unless the contract includes it: a week off can mean a week unpaid;
- no health insurance unless you buy it;
- you handle tax yourself, and it isn't optional;
- the work can end at short notice if the contract allows it.
The upside is real too: you're often paid in dollars into an account you control, you can work for more than one client if your contract allows, and the company saves on EOR fees, which can make it easier to say yes to you.
Price the difference in
If you compare a contractor rate with an employee salary, the contractor rate should be higher. A simple check: the minimum pension alone is 18% of monthly pay between employer and employee. Add the value of paid leave and health insurance, then the time you'll spend on invoicing and tax. A contractor rate that's the same as the salary would leave you worse off.
Questions to ask before you sign
Remote's own guide to contractor agreements lists what a contract should cover: your obligations, payment terms and expenses, confidentiality and exclusivity, who owns the work, tax and legal liability, and how the agreement ends. Turn those into questions:
- Am I a contractor or an employee? If an employee, which EOR, and which of its entities is my employer?
- What currency is my pay set in and paid in? If it's converted, at what rate and when?
- When and how am I paid? Monthly or twice a month, by which platform, and how many days after I invoice?
- What are the hours? Which time zone, how many hours of overlap, and is there on-call work?
- How much notice does either side give? Is there pay in lieu of notice?
- Is there paid time off? For contractors, are public holidays or a set number of days paid?
- Who owns what I make? Most contracts assign your work to the company, which is normal. Check whether it also claims things you build in your own time.
- Can I work for others? Look for exclusivity and non-compete clauses.
- Who provides equipment? Is there an allowance for a laptop, internet or a power backup?
- Is there a probation period? Nigerian law doesn't require one, but many contracts set three to six months.
Nobody legitimate will ask you to pay anything to get the contract or to "activate" your account on Deel or Remote. If that happens, read how to spot remote job scams.
Which is better for you?
If you want stability, a pension and someone else handling tax, an EOR job is better, even if the take-home figure looks smaller. If you're early in your career, or you'd rather hold dollars and have more than one client, contracting can work well, as long as you set money aside for tax and for months without work.
Many people start as contractors and are moved to an EOR contract once the company knows them. It's fair to ask, after six months or a year, whether that's possible.
If you're preparing for interviews where these questions come up, Premium on WorkRemote includes a one-on-one interview prep session. Open roles that accept Nigerian applicants are on the jobs board.
Frequently asked questions
Is it legal for a foreign company to hire me as a contractor from Nigeria?
Yes. Foreign companies hire contractors in Nigeria all the time. The company carries the risk if it treats a contractor exactly like an employee; for you, the main consequence is that you don't get employee benefits unless the contract adds them.
Does Deel or Remote pay me in dollars?
As a contractor, usually yes: you're paid in the contract currency and choose how to withdraw. As an EOR employee in Nigeria, payroll is in naira by default. Remote lists USD pay for Nigeria as an option the company can pay extra for.
Do contractors in Nigeria get a pension?
Not automatically. No employer contributes for you, so you'd have to pay into a pension yourself. An EOR employee gets at least 10% from the employer plus 8% from their own pay.
What is an employer of record?
A company, such as Deel, Remote or Oyster, that legally employs you in Nigeria on behalf of a foreign company. It runs payroll, deducts PAYE and pays your pension and insurance, while the foreign company manages your work.
Should I ask for more money as a contractor?
Yes. A contractor rate should be higher than the equivalent salary, because you pay for your own pension, leave, health insurance and tax administration.
Sources
- What is an employer of record?, Deel
- Hire employees in Nigeria, Deel
- Pricing, Deel
- Misclassification of employees as independent contractors, Deel, July 2026
- Employ in Nigeria, Remote
- Pricing, Remote
- How non-local currency salaries work for EOR team members, Remote Help Center
- Payslips for non-local currency salaries, Remote Help Center
- Independent contractor agreements, Remote, 5 February 2025
- Hire employees in Nigeria, Oyster
- Pricing, Oyster
- Nigeria: other taxes (pension, National Housing Fund), PwC Worldwide Tax Summaries, reviewed 29 May 2026
- Nigeria: corporate other taxes (NSITF, pension), PwC Worldwide Tax Summaries
- International employment law guide: Nigeria, Deloitte, September 2025
- Annual leave and holidays and Maternity and work, WageIndicator Nigeria, April 2026
- Overview of employment-related laws in Nigeria, Banwo & Ighodalo on Mondaq, December 2018
