# Payroll in Nigeria: employer costs, taxes and compliance

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> Canonical page: https://payrolloverview.com/countries/nigeria/
> Methodology: every figure carries a source and a date in our database; ratings are averages of third-party platforms (https://payrolloverview.com/methodology/).
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> Data updated: September 2026
> Every figure below carries its statutory source and year.

Running payroll in Nigeria means doing several things every month: paying employees in naira, calculating and withholding income tax from each salary, deducting the employee's share of social security contributions, adding the employer's own contributions on top, and filing the relevant returns. If you're a foreign company, you'll also need a legal presence in the country before you can formally employ anyone and put them on a local payroll.
This guide walks you through what that costs, how the pay cycle works, what leave entitlements land in payroll, and how termination is handled from an operational standpoint. The data tables on this page carry the exact rates and statutory figures.

## Employer costs & taxes

| Item | Value | Source |
|---|---|---|
| Employer social security (on top of gross salary) | 11% | ISSA Country Profiles (2024) |
| Employee social security (withheld from pay) | 13% | ISSA Country Profiles (2024) |
| Corporate tax rate | 30% | PwC Worldwide Tax Summaries (2026) |

## Pay & payroll operations

| Item | Value | Source |
|---|---|---|
| Payroll cycle | monthly | Perplexity (AI gap-fill) (2026) |
| 13th-month salary | none | Perplexity (AI gap-fill) (2026) |
| Minimum wage (per month) | NGN 70,000 | Manual / editor (2024) |
| Statutory work week | no_statutory_figure | National government (2026) |

## Leave & time off

| Item | Value | Source |
|---|---|---|
| Paid annual leave | 6 days | National government (2026) |
| Public holidays | 11 days | Perplexity (AI gap-fill) (2026) |
| Maternity leave | 12 weeks | National government (2026) |
| Paternity leave | 0 weeks | Perplexity (AI gap-fill) (2026) |

## Termination

| Item | Value | Source |
|---|---|---|
| Notice period | 3.2 weeks | National government (2026) |
| Severance pay (at 1 year tenure) | 0 weeks | ILO EPLex (2025) |

## Labor market context

| Item | Value | Source |
|---|---|---|
| Retirement age | 50 | SSA Social Security Programs Throughout the World (2019) |
| Unemployment rate | 3.1% | World Bank Open Data (2025) |
| GDP per capita | $1,224 | World Bank Open Data (2025) |
| Union density | 9.9% | ILOSTAT (2008) |

## Employer contribution breakdown

| Contribution | Rate |
|---|---|
| Pension & disability | 10% |
| Work injury insurance | 1% |

Total: about 11% of gross salary, paid by the employer on top of pay.

The gap between what an employee earns and what they actually cost you is real in Nigeria. On top of gross salary, employers must contribute to the pension fund, and that contribution adds a meaningful amount, roughly a tenth or more, to every payroll run. When you add income tax withholding obligations into the picture, the total tax wedge, meaning the combined cost of employment relative to what the worker takes home, is worth modelling before you price a role. See the table below for the exact employer and employee rates.
One thing worth knowing: Nigeria does not have a statutory thirteenth-month payment, so you won't find that built into the cost structure the way it appears in some other markets. Your cost planning is cleaner for it, but you still need to budget for social contributions every single month without exception.

Payroll in Nigeria runs on a monthly cycle, so you process and pay once a month. The statutory minimum wage sits at 70,000 naira per month, and that floor applies to all employees, so any offer below that figure is not compliant. There is no legal requirement for a thirteenth-month or bonus salary payment, though some employers offer one contractually. If you do, make sure it's clear in the employment contract whether it's discretionary or guaranteed, because that changes how you account for it.

Annual leave entitlement is quite short by international standards, at 6 days per year, and employees are also entitled to 11 public holidays on top of that. Both create payroll obligations you need to track. Maternity leave runs for 12 weeks, and that needs to be reflected in how you manage payroll continuity for affected employees. There is no statutory paternity leave, so fathers are not entitled to paid time off by law. On termination, the notice period averages around three weeks, and there is no statutory severance pay requirement, meaning final pay is generally limited to salary through the notice period plus any accrued leave owed.

If you don't have a Nigerian entity, you can't run a local payroll yourself, full stop. And even if you do have an entity, keeping up with contribution rate changes, local filing requirements, and currency considerations takes dedicated attention. A global payroll provider or employer of record handles the entity question, manages the monthly filings, and keeps your rates current without you having to monitor every regulatory update. It's worth considering seriously if you have a small headcount in Nigeria or you're just getting started there.