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
Last reviewed:
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
What's the employer cost in Nigeria?
Around 11–13% on top of gross — primarily the 10% pension contribution plus ~1% each for NSITF and ITF (if applicable).
Do I need to pay in Naira?
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.
Is HMO health insurance required?
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.