Payroll & Employment Guide Nigeria

In Nigeria, employment contracts must be in writing and should outline the terms of employment, job description, working hours, benefits, and termination clauses. These contracts can be fixed-term or open-ended.

Notice periods: Up to 1 month

Termination of employment: Can occur via notice, payment in lieu of notice, or for just cause (following due process).

Employers in Nigeria are legally required to provide a set of statutory benefits. Many companies also offer additional perks to attract top talent.

Mandatory benefits: National Housing Fund (NHF), National Health Insurance Scheme (NHIS), Personal Income Tax (PIT), Pension Fund, Industrial Training Fund (ITF), and Nigeria Social Insurance Trust Fund (NSITF)
Common perks: Performance bonuses, transport allowances, mobile/data stipends
Leave policies: Annual leave, sick leave, maternity leave, and paternity leave.

Nigeria has introduced significant updates to its personal income tax framework, effective 1 January 2026, aimed at reducing the tax burden on lower-income earners.

Under the revised tax framework, the first ₦800,000 of an employee’s annual taxable income (after statutory deductions) is fully tax-exempt.

• Employees whose annual taxable income falls within ₦800,000 will not pay personal income tax
• Employees earning above this threshold will benefit from the exemption on the first ₦800,000, with tax applying progressively on the remaining balance

Personal income tax rates: Personal income tax is applied progressively at the following rates:

• First ₦800,000 – 0% (tax-free)
• ₦800,001 – ₦3,000,000 – 15%
• ₦3,000,001 – ₦12,000,000 – 18%
• ₦12,000,001 – ₦25,000,000 – 21%
• ₦25,000,001 – ₦50,000,000 – 23%
• Above ₦50,000,000 – 25%

Rent Relief Allowance (RRA): The Rent Relief Allowance (RRA) replaces the former Consolidated Relief Allowance.

• Deduction value: Lower of 20% of annual rent paid or ₦500,000

Required documentation: For payroll and tax computation purposes, the following documents are required:

• A valid tenancy agreement or lease
• Rent receipts or landlord confirmation

Documentation is typically required once per year or whenever there is a change in rent or accommodation details. Monthly submission is not required.

Salaries in Nigeria are typically paid monthly. Employers must ensure accurate deductions for taxes and contributions and submit reports to the relevant authorities.

Minimum salary requirement: There is no minimum salary threshold required to run payroll in Nigeria. Employers must process payroll for all employees, regardless of salary level. The 2026 update affects tax treatment only, not payroll eligibility.

Salary payment deadline: As outlined in employment contracts (usually monthly)
Taxes and contributions payment deadline: Monthly, based on remittance schedules
Payroll declarations deadline: Monthly submission to tax and regulatory bodies
Payroll currency: Nigerian Naira (NGN)

Using EOR services in Nigeria allows you to legally employ individuals in the country without opening legal entities there. The EOR takes over all the legal responsibilities as an official employer, including:

• Legal employment and contracts
• Payroll processing
• Tax withholding
• Benefits administration
• Onboarding/offboarding employees

Using PEO services in Nigeria provides HR and administrative support, while you remain the legal employer. PEO services are ideal for employers who already have legal entities in Nigeria but need support to manage their workforce operations, including:

• HR support and workforce administration
• Payroll and benefits management
• Compliance and local labour law guidance
• Employment contracts assistance

Native Teams provides a payroll calculator adjusted per Nigeria’s labour laws. Estimate gross-to-net salaries, tax withholdings, and employer costs in Nigeria with our localised calculator. Designed to meet all payroll and compliance requirements.

Here is a list of public holidays in Nigeria: