Setting up a HR-TECH Company in Nigeria – All you need to know

With a population of up to 250 million people, Nigeria is the unique position of being an ideal market for many things, affordable Human Resources Capital included. This is one of the reasons behind Nigerian Human Capital, both skilled and unskilled, being some of the most sought after worldwide.It’s also one of the fertile grounds for the testing by entrepreneurs of another potentially very lucrative sector of Tech – HR-TECH.

Human Resources or HR can be defined as the component of a business made up of people, both skilled and unskilled, who operate as the workforce or labour force of a company, an organization, an industry or an economic sector.

This will then help with understanding the concept of Human Resources Management (HR-Management or HRM) which involves a practical system of knowledge on the different methods used in the efficient management of the workforce of a company or organization geared towards the company/business gaining an advantage resulting in the maximum utilization of labour performance to achieve the strategic objectives of an employer, HR management being described as having an Acquisition (pre-hiring) phase, a Development (training) phase, and a Termination (post-hiring) phase. 

An understanding of HR Management will then help us in having a basic understanding of HR-TECH which is a general term describing the associated software and hardware used in the automated delivery of HR functions(Workforce Analytics, Employee payroll & compensation, Talent acquisition & performance Management, benefits administration etc),  either within an organization or in a service delivery capacity to various organizations.

The classes of HR-TECH Companies include :-

4. Online/Digitally based HR Consultancy/Remote HR /Management Firms e.g. Remote.
5. Online HR Recruitment Platforms e.g. Jobberman, ZohoRecruit.
6. Online/Digital HR Outsourcing platforms (strictly focused on seconding trained and experienced HR Capital to companies in need of HR on a contractual basis).
7. HR Software Solutions Providers either as Traditional SaaS(Software as a Service) providers or Cloud-based software providers focused on the delivery of the following types of HR software among others:-

a). Core HR Management software e.g. Bamboo HR, SageHR.

b). HR Analytics software e.g. Anaplan, TalentSoft.

c). HR Case Management platforms e.g. HR Acuity, RiskAware.

d). Time management, Payroll and compensation management software e.g. ELMO,Zimyo, Jibble, GroveHR.

e). HR Task Management Software e.g. Taskworld, Smartsheet, Pipefy.

f). HR Performance Management software e.g. PrismHR.

g). Internal Communications & Scheduling e.g. Zoom, Miro, Google Workspace.

h). Hiring & Onboarding tools e.g. JazzHR, Oracle Taleo, Jobilla, LinkedIn.

i). HR Compliance Management software e.g. Flock, WorkTerra.

j). HR Training, Learning & Development Management Software e.g. Open LMS, Trupp.

k). Employee Wellness e.g. WellTok, meQuilibrium.

5. Digital Pension Fund Administrators (PFAs) e.g  Netcetera’s P40 :- Professional Fund Administrators are professional Pension Fund Management companies which in collaboration with Pension Fund Custodians or  PFCs manage and invest Pension Funds while being licensed and regulated by the National Pension Commission and require a minimum share capital of 150 million Naira and a license fee of 5million Naira to be registered.

Digital PFAs can now render digitally the functions of traditional PFAs which include Digital Legacy archiving and Trustee liaisons, Digital Salary reporting, and Digital Payouts of relevant benefits as well as accounting for all transactions relating to the pension funds under their management.

What You Need To Know About HR Outsourcing.

HR Outsourcing is known to be most problematic legally when it is not entered into with a proper understanding of contract laws. HR Outsourcing is basically an agreement between an employer and a 3rd party HR Capital provider whereby the employer transfers the management and responsibility for certain HR functions to the 3rd party provider. 

This also implies a transfer of Legal risk to the 3rd party provider in the event of any misconduct or losses to the employer caused by the contracted or outsourced staff. It’s thus very important that any start-up company should have close by before signing any HR Outsourcing agreement a lawyer well versed in labour and contractual laws as well as a detailed periodic Due Diligence search system in place. 

What You Need A Lawyer For As  A HR-TECH Company.

You need to retain a lawyer who is knowledgeable in Labour law, Contractual law and Regulatory Compliance as well possessing experience in National Industrial Court Litigation for the following reasons :-

a). Carrying out the registration of your HR services company and well as rendering Company Secretarial and Post-Incorporation Compliance services to your company;

b). Carrying out the set-up of your Digital platform (Website or App) through the documentation of all Frontend and Back-end development contracts as well as the registration of your platform as a Trademark and Copyright or Patent in the case of the creation of a new HR software technology;

c). Assisting in template documentation and subsequent case by case contractual vetting of all HR Outsourcing agreements, HR Consultancy retainer agreements, Talent Recruitment & Onboarding agreements, Contracts for services & Contracts of Service, and Dismissal letters;

d). Rendering general Legal Advisory services as well as Labour Dispute Management and Resolution services;

e). Rendering full-spectrum HR and Tech Compliance services such as –

– Compulsory NITDA (National Information Technology Development Agency) Data Protection compliance.

– Nigerian Labour Act Compliance.

– National Pension Commission compliance in line with the Pensions Act and the procurement of PENCOM Compliance certificates.

– The Industrial Trust Fund Compliance and the procurement of ITF Compliance certificates.

– NSITF (Nigerian Social Insurance Trust Fund) compliance in line with the Employee Compensation Act .

– Trade Union Act Compliance.

– Tax compliance services, particularly Personal Income Tax compliance services in line with the Personal Income Tax Act.

– Compliance officer services for PFAs in line with PENCOM guidelines.

While everything stated and explained above still represents a basic knowledge about how to set up a HR-TECH business, it is hoped that this will provide an insight into what is needed to effectively operate in this increasingly lucrative sector of Tech services in the Nigerian business space.