TL;DR, Hiring in Nigeria
- Fully-loaded employer cost: ~12% on top of gross
- Pension: 10% employer contribution (10% employee) under PRA 2014
- ITF (training fund) 1% applies if payroll exceeds NGN 50M/year
- NSITF (work injury) 1% mandatory across the board
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Statutory employer costs in Nigeria
In Nigeria, the largest employer contribution is the 10% pension under the Pension Reform Act (employee adds another 8%). Other statutory items include 1% NSITF (Employees' Compensation), 1% ITF (Industrial Training Fund, for employers with 5+ staff or payroll > NGN 50M), and 1% NHF (National Housing Fund) for employees earning above NGN 3,000/month. Total employer-side burden is roughly 11–13%.
| Contribution | Employer rate | Notes |
|---|---|---|
| Pension (PRA) | 10.0% | Employer minimum; employee contributes 8% |
| NSITF (Employees' Compensation) | 1.0% | Work injury fund, mandatory |
| ITF (Industrial Training Fund) | 1.0% | If 5+ employees or payroll > NGN 50M/year |
| NHF (National Housing Fund) | 2.5% | Deducted from employee salary; employer remits |
Mandatory employee benefits
Beyond statutory contributions, Nigeria law requires the following benefits the employer must fund.
- Annual leave
- Minimum 6 working days after 12 months; market norm is 18–25 days.
- HMO (health insurance)
- Not strictly mandatory but standard for white-collar roles.
- 13th month
- Not statutory; common in financial services and oil & gas.
Termination, notice and severance
Probation
3–6 months by contract; no statutory cap.
Notice period
1 day (<3 months), 1 week (<2 years), 2 weeks (2–5 years), 1 month (>5 years).
Severance
Not statutory; payment in lieu of notice is the norm.
Common compliance pitfalls
- Expatriate Quota requirements for non-Nigerian hires, EOR avoids this for remote-only roles.
- PAYE remittance is state-level, each employee's residence state collects their income tax.
- Forex restrictions complicate USD-denominated salary payments through Nigerian banks.
Frequently asked questions
Around 11–13% on top of gross, primarily the 10% pension contribution plus ~1% each for NSITF and ITF (if applicable).
Yes for local payroll through an EOR. Some EORs offer USD-pegged gross with NGN payment to manage FX risk, but the actual disbursement is always NGN.
Not federally, but Lagos State now mandates it under the LSHMA scheme. Most white-collar candidates expect HMO regardless.
Sources
Statutory rates and rules verified against the following authorities. We update this page when rates change.