Payroll and Benefits Guide Nigeria
Last updated: Mar 03, 2026
Contribution
| Employer Payroll Contributions | |
|
10.00%
|
Pension (PENCOM))
|
| 1.00% | National Social Insurance Trust Fund (NSITF) |
|
1.00%
|
Industrial Training Fund (ITF) (applicable to all employers with a minimum of five employees or annual turnover of 50 million NGN) |
|
3.25%
|
National Health Insurance Scheme (NHIS) for Federal public sector only |
|
10%
|
National Health Insurance Scheme (NHIS) Private sector & other tiers of government |
| 25.25% | Total Employer Cost |
| Employee Payroll Contributions | |
|
8.00%
|
Pension (PENCOM)
|
|
5%
|
NHIS
|
|
2.50%
|
Housing Fund applicable to employees earning more than 3,000 NGN per year)
|
| 13.00% to 15.50% |
Total Employee Cost |
| Income Tax | |
|
0%
|
First 800,000 NGN Annually
|
|
15.00%
|
Next 2,200,000 NGN Annually
|
|
18.00%
|
Next 9,000,000 NGN Annually
|
|
21.00%
|
Next 13,000,000 NGN Annually
|
|
23.00%
|
Next 25,000,000 NGN Annually
|
| 25.00% | Above 50,000,000 NGN Annually |
Employer taxes
Employee taxes
Minimum Wage
General
The national minimum wage in Nigeria is currently 70,000 NGN per month.
MINIMUM WAGE (PER MONTH)
Payroll
Payroll Cycle
In Nigeria, the payroll frequency is monthly, bi-weekly or weekly. The payment for salaries is to be made at least once a month.
13th Salary
There are no statutory requirements for 13th-month salary payments. However, bonuses are common at the discretion of the employer.
Working Hours
General
The standard working week in Nigeria consists of 48 hours, 8 hours per day. A 40-hour workweek with 8 hours per day is common as well.
Overtime
The Labour Act (Section 13) sets the standard maximum work week, with any work beyond this being classified as overtime.
Maximum Ordinary Hours: The standard working time is generally stipulated as 8 hours per day and 48 hours per week.
Note: The Labour Act itself does not specify a maximum number of daily or weekly working hours, but 8 hours/day and 48 hours/week is the widely accepted maximum norm used as the basis for overtime calculation in practice and referenced by government-related bodies.
Rest Periods: Workers are entitled to a rest period or break of at least one hour in total if they work for six hours or more in a day. They are also entitled to at least one day of rest within every seven days.
Maximum Overtime Limit: The Labour Act does not explicitly specify a maximum limit on overtime hours. Employers are expected to ensure that overtime is reasonable and does not compromise the employee’s health and safety.
Overtime Compensation Rates
Overtime pay rates are not fixed by the Labour Act and are instead matters of contractual agreement.
- Source of Rates: Overtime compensation rates are determined by:
- The Individual Employment Contract.
- Collective Bargaining Agreements (if applicable).
- Orders by an Industrial Wages Board for certain industries where collective bargaining is absent.
-
Common Market Practice (Non-Statutory): Although not legally mandated, common market practice and many contracts follow a standard structure:
| Day/Condition | Common Compensation Rate (Contractual) | Formal Note (Non-Statutory) |
| Normal Overtime (Regular Working Days) | 125% (Time and a quarter) of the regular hourly rate. | This is the most common contractual minimum for hours worked beyond the ordinary threshold. |
| Rest Day/Weekend Work (Typically Sunday) | 150% (Time and a half) of the regular hourly rate. | This rate is commonly stipulated in contracts for work on a weekly rest day. |
| Public Holiday Work | 150% (Time and a half) or higher, plus the normal day’s wage. | Compensation is also frequently paid as a premium rate. |
Compensatory Rest: If an employee is required to work on their designated rest day or a public holiday, they are entitled to either monetary compensation at the agreed overtime rate or a paid day off in lieu within 14 days.
Leave
Annual Leave (vacation)
If an employee has been employed for 12 months, they are entitled to 6 days of paid annual leave. It is common to give 7 days from the first day of work. Unused leave can be carried over at the discretion of the employer.
Public Holidays
Public holidays that fall on the weekend are usually lost unless a day off in lieu has been mandated by the government.
Religious holidays are determined by the lunar cycle and will show as tentative until they are confirmed nearer the date of the holiday.
| Date | Day | Holiday | Notes |
|---|---|---|---|
| 1 January 2026 | Thursday | New Year’s Day | Standard holiday |
| 20 March 2026 | Friday | Eid el-Fitr (End of Ramadan) | |
| 21 March 2026 | Saturday | Eid el-Fitr Holiday | |
| 3 April 2026 | Friday | Good Friday | Standard holiday |
| 6 April 2026 | Monday | Easter Monday | Standard holiday |
| 1 May 2026 | Friday | Workers’ Day (Labour Day) | Standard holiday |
| 27 May 2026 | Wednesday | Eid el-Kabir (Feast of Sacrifice) | |
| 28 May 2026 | Thursday | Eid el-Kabir Holiday | |
| 12 June 2026 | Friday | Democracy Day | Standard holiday |
| 25 August 2026 | Tuesday | Eid el-Maulud (The Prophet’s Birthday) | |
| 1 October 2026 | Thursday | National Day (Independence Day) | Standard holiday |
| 25 December 2026 | Friday | Christmas Day | Standard holiday |
| 26 December 2026 | Saturday | Boxing Day | Standard holiday |
Sick Days
Employees are entitled to 12 days of paid sick leave per year following the presentation of a medical certificate after two days of absence. This is paid at full salary by the employer.
Maternity Leave
Female employees within the public sector are entitled to 16 weeks of maternity leave at 100.00% of the employee’s average pay rate. In contrast, private-sector employees are entitled to 12 weeks of paid maternity leave at 50.00% of the employee’s average salary. Employees receive this entitlement following six months of consecutive service within the company.
Paternity Leave
Federal law doesn’t mandate paternity leave; 14 days applies to civil servants, while private firms may offer it voluntarily.
Parental Leave
There are no provisions in the law regarding parental leave.
Other Leave
There are no provisions in the law for additional statutory leave.
PAID MATERNITY LEAVE (DAYS)
Termination
Termination Process
The termination process varies according to how the employment agreement and collective agreement are in place and is based on the type of contract and reason for termination. Employment can be terminated at any time by either the employer or the employee providing notice is given.
| Salary payment interval / date | Final payment on termination | Bank account payment requirement |
|---|---|---|
| Wages must be paid at agreed periods (daily, weekly, or other), and where the period is more than one month, they must be paid at intervals not exceeding one month. | The law requires wages and other sums due on termination to be paid. | Wages must be paid in legal tender (currency) and, unless the worker consents in writing, payments by cheque or postal order are allowed; the Act does not mandate payment only into a bank account for all employees. |
Notice Period
In Nigeria, the notice period of an employee is dependent on their seniority, as follows:
- One day notice is required for three months of service or less
- One week’s notice is required for three months to 2 years of service.
- Two weeks’ notice is 1required for 2 years to 5 years of service.
- One month’s notice is required for five or more years of service.
Severance Pay
For manual and clerical workers (who are covered by the labor act), redundancy pay is mandatory. The law does not stipulate the amount to be paid as redundancy pay, and it is negotiated by the parties. For employees not covered by the labor act, severance pay is usually subject to the provisions of the employment contract or collective agreement.
Probation Period
No probation period is required but it is common to use 3-6 months.
Immigration
Nigeria’s immigration system provides several options for employers of foreign nationals. Nigeria is a member of the Economic Community of West African States (ECOWAS). Its immigration program provides ECOWAS-specific provisions. Requirements, processing times, employment eligibility, and benefits for accompanying family members vary by permit type.
Business visitors from non-ECOWAS member states may use the business visa for stays of up to 90 days. This visa can be extended in Nigeria for another 30 to 90 days at the authorities’ discretion.
ECOWAS nationals are visa-exempt and may enter Nigeria with a valid passport.
Non-ECOWAS nationals require an extension and to pay the corresponding fee for any stay beyond 56 cumulative days in 12 months.
The Temporary Work Permit is suitable for foreign nationals undertaking short-term technical assignments (e.g., after-sales installation, maintenance, repairs of machines, and equipment). It permits a single entry to Nigeria for work for up to 90 days.
The Combined Expatriate Residence Permit and Aliens Card (CERPAC) or the Temporary Work Permit (TWP) are suitable for foreign nationals undertaking work depending on their intended length of stay.
VAT
General
The standard rate of VAT in Nigeria is 7.50%.
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Payroll and Benefits Guide
in Nigeria
What’s covered in this guide:
- Employer/employee contributions
- Minimum wage
- Working hours
- Visa requirements
And more...
Public Holidays Calendar
| Date | Day | Holiday | Notes |
|---|---|---|---|
| 1 January 2026 | Thursday | New Year’s Day | Standard holiday |
| 20 March 2026 | Friday | Eid el-Fitr (End of Ramadan) | |
| 21 March 2026 | Saturday | Eid el-Fitr Holiday | |
| 3 April 2026 | Friday | Good Friday | Standard holiday |
| 6 April 2026 | Monday | Easter Monday | Standard holiday |
| 1 May 2026 | Friday | Workers’ Day (Labour Day) | Standard holiday |
| 27 May 2026 | Wednesday | Eid el-Kabir (Feast of Sacrifice) | |
| 28 May 2026 | Thursday | Eid el-Kabir Holiday | |
| 12 June 2026 | Friday | Democracy Day | Standard holiday |
| 25 August 2026 | Tuesday | Eid el-Maulud (The Prophet’s Birthday) | |
| 1 October 2026 | Thursday | National Day (Independence Day) | Standard holiday |
| 25 December 2026 | Friday | Christmas Day | Standard holiday |
| 26 December 2026 | Saturday | Boxing Day | Standard holiday |
Questions & Answers