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- Employee Cost Calculator
- Nigeria
Employee cost calculator in Nigeria
Looking to hire in Nigeria? Our Employee Cost Calculator gives you a clear view of expenses including taxes and employer contributions.
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Request a demoFrequently Asked Questions (FAQs)
What are the mandatory employment costs and statutory benefits employers must provide in Nigeria?
In Nigeria, employers are required to contribute to the National Social Insurance Trust Fund (NSITF), the Employee Compensation Scheme, and the National Housing Fund (NHF). Statutory benefits also include contributions to the Nigerian Pension Scheme (under the Pension Reform Act 2014) at a minimum of 10% of basic salary, housing, and transport allowance, as well as statutory paid annual leave and sick leave.
How are payroll taxes calculated for employees in Nigeria, and what are the employer's obligations?
Personal Income Tax (Pay-As-You-Earn, or PAYE) must be withheld by employers and remitted monthly to the relevant State Internal Revenue Service, based on graduated rates up to 24%. Employers are also responsible for remitting pension contributions, NHF (2.5% of basic salary), and other statutory deductions as outlined by local regulations.
What common hidden or indirect costs should employers anticipate when hiring in Nigeria?
Employers in Nigeria often incur additional costs for medical allowances (where not covered by statutory schemes), staff training and onboarding, and, depending on company policy or industry, may also provide a 13th month salary or performance bonuses. Severance and redundancy payments are also required upon certain types of termination, as outlined in the Nigerian Labour Act.
What legal requirements impact employment costs in Nigeria, such as minimum wage and termination rules?
The current national minimum wage is ₦30,000 per month (as of 2024), and all employers must comply regardless of their size or sector. Termination of employment is regulated by the Labour Act, which mandates notice periods and, in some cases, statutory redundancy or severance pay; collective bargaining agreements may impose further obligations in unionized sectors.
What are the typical employment practices in Nigeria regarding contract types, probation, and customary benefits?
Permanent and fixed-term contracts are prevalent, with probation periods usually ranging from three to six months as stipulated in the employment contract. While not legally required, it is customary for employers to provide additional allowances such as medical, housing, and transport, and to formalize employment terms in writing to ensure compliance with the Labour Act.
