How to hire and pay contractors in Nigeria

How a foreign company hires and pays a contractor in Nigeria

Sign a services agreement that buys defined tasks, have the contractor invoice you, and pay into their Nigerian bank account, in naira or into a US dollar domiciliary account, or to a wallet. A genuine contractor is not on Nigerian payroll.

With Toku as contractor of record, Toku contracts each contributor, collects their invoices and pays them, and your company buys the labeled data from Toku. For more depth see the Nigeria contractor hiring compliance guide, and for full-time hires, employer of record in Nigeria.

Contractor or employee: the Labour Act and the courts

The Labour Act defines a contract of employment as an agreement, oral or written, express or implied, to employ someone as a worker (s.91). Its definition of worker covers manual and clerical work and excludes people in administrative, executive, technical or professional roles, so it rarely settles whether a skilled contractor is an employee.

There is no statutory presumption of employment. The National Industrial Court looks at the reality of the relationship over the contract label. In Olatunji v Uber Technologies System Nigeria (2018) the drivers' claim to be employees failed for lack of evidence, so the court did not decide their status.

Tax adds a second line: the Nigeria Tax Act 2025 treats employment income separately from fees for services and professional income (s.4), so a misclassified contractor can create payroll tax exposure.

• Pay per accepted task or deliverable, not a salary.
• Let contributors choose their tasks and hours, and work for other clients.
• Don't give titles, offices or staff benefits.

Tax registration, invoices and the records you keep

The Nigeria Tax Act 2025 has applied since 1 January 2026. It taxes fees for services and income from a profession or vocation (s.4), and a resident individual is taxed on income wherever it arises, whether or not it is brought into Nigeria (s.12).

Under the Nigeria Tax Administration Act 2025, every taxable person registers for a Tax ID (s.4), which must appear on returns and transaction documents, and banks require it to open or operate an account (s.8). Resident individuals deal with the internal revenue service of the State where they live (s.3(2)), file an annual self-assessment return whether or not tax is due (s.13), and keep records for at least six years (s.31).

A payer must withhold tax at the rates in the withholding regulations (s.51), and the Act does not say clearly whether that reaches a foreign company with no Nigerian presence. When nothing is withheld, the contractor reports the gross fees on their return.

What you keep as the payer: the contract, the contractor's Tax ID, their invoices, accepted-task records and payment confirmations. Toku keeps these for every contributor it contracts.

Payment rails, naira and Central Bank of Nigeria rules

The naira is Nigeria's currency, and only Central Bank of Nigeria notes and coins are legal tender (CBN Act 2007, ss.15 and 20). The official FX market is a single Nigerian Foreign Exchange Market, where transactions go through authorised dealers at the prevailing market rate (CBN NFEM Guidelines, 2024).

Under the CBN Foreign Exchange Manual, inbound transfers are paid into the beneficiary's bank account in naira or another currency the CBN allows, and cash payout is capped at the naira equivalent of USD 200 (Memorandum 5). Nigerians can hold domiciliary accounts in foreign currency with unrestricted access to their funds, subject to anti-money-laundering rules (Memorandum 20).

In practice: each contractor chooses US dollars into a domiciliary account, which they can keep or convert at the market rate, naira into a local account, or stablecoins to a wallet.

Paying contractors in Nigeria in stablecoins

Yes, contractors in Nigeria can be paid in stablecoins with Toku. Each contributor can choose USDC or USDT to their own wallet instead of a bank transfer.

The Investments and Securities Act 2025 counts virtual and digital assets as securities (s.357) and requires the Securities and Exchange Commission to register and regulate digital asset exchanges and service providers (s.3). The Central Bank's December 2023 guidelines let banks open accounts for licensed providers, while banks themselves still may not hold or trade crypto on their own account. Nothing stops an individual from receiving or holding it.

Under the Nigeria Tax Act 2025, gains from digital asset transactions are taxable (s.4(1)(j)), and a fee paid in stablecoins is income like any other. Because bank rules still restrict crypto, Toku confirms the route for each person. To set it up, talk to us about paying in stablecoins in Nigeria.

Making the IP transfer valid in Nigeria

Under the Copyright Act 2022, copyright first belongs to the author except as otherwise provided in an agreement (s.28(1)), so a contractor agreement can say that copyright in each deliverable vests in the company from the start. An assignment, or an exclusive licence, has no effect unless it is in writing (s.30(3)).

Electronic signing works: the Evidence Act 2011 lets an electronic signature satisfy a signature requirement (s.93), and the Cybercrimes Act 2015 makes electronic signatures binding for transactions outside a short list of exclusions that does not include copyright (s.17). A recorded click-to-sign agreement is acceptable.

• Vest it from the start: include a clause that copyright in each task output vests in your company, or in Toku for onward transfer to you, under s.28(1).
• Back it with a written assignment of identified or project-scoped deliverables. An assignment of all of an author's future works is not permitted (s.30(10)).
• Spell out the scope: assignments can be limited by acts, period or territory (s.30(2)), so state worldwide, for the full term, and list uses such as AI and ML training, modification and sublicensing.
• Moral rights cannot be transferred during the author's life (s.14(3)), so the contract should say how the work may be edited and whether it is credited.

Pay data labelers in Nigeria with Toku

Toku Contributor Payouts contracts each labeler in Nigeria as contractor or agent of record, collects an IP assignment that meets Nigerian law and pays per accepted task in naira, US dollars, USDC or USDT. You send task totals through the mass payouts API or a file, and every payout ties back to its contributor, agreement and tasks.

Toku pays contractors in 100+ countries. Contractor management lists at $19 per contractor per month on the pricing page, and Contributor Payouts is priced on the contributors you actually pay. The API is documented at docs.toku.com.