How much does an employee cost in Nigeria?
The salary is only part of it. Add the employer pension, NSITF and ITF to see the real monthly and annual cost of a hire.
Real monthly cost of this employee
₦448,000
₦5,376,000 a year · ₦48,000 a month on top of salary
- Gross salary
- ₦400,000
- Employer pension (10%)
- ₦40,000
- NSITF (1%)
- ₦4,000
- ITF (1%)
- ₦4,000
- Total monthly cost
- ₦448,000
The employee takes home about ₦319,260 after PAYE and pension.
Free, no sign-up. Estimates based on Nigerian rules as of 2026. Not tax advice. See our terms.
How to calculate the cost of an employee in Nigeria
The cost to the company is gross salary plus the statutory contributions the employer pays on top. PAYE and the employee's own pension come out of the salary, so they don't add to the cost.
- 1
Start with gross monthly salary
Basic + housing + transport + other allowances.
- 2
Add employer pension (10%)
Required when the company has 3 or more employees, under the Pension Reform Act 2014.
- 3
Add NSITF (1%)
Employee Compensation Scheme contribution on monthly payroll.
- 4
Add ITF (1%)
Industrial Training Fund, for employers with 5 or more staff or ₦50m+ turnover.
- 5
Multiply by 12
That's the annual cost, before equipment, HMO, bonuses and other benefits.
Worked example: ₦400,000 salary, company with 6 staff
| Gross salary | ₦400,000 |
|---|---|
| Employer pension (10%) | ₦40,000 |
| NSITF (1%) | ₦4,000 |
| ITF (1%) | ₦4,000 |
| Monthly cost to company | ₦448,000 |
| Annual cost | ₦5,376,000 |
Health insurance, equipment, 13th-month pay and other benefits come on top if you offer them.
Questions
How much does it cost to employ someone in Nigeria?
Roughly gross salary plus 10% employer pension (from 3 employees), 1% NSITF and 1% ITF (from 5 employees or ₦50m turnover): about 112% of salary, before benefits such as HMO and equipment.
Is PAYE an employer cost?
No. PAYE is deducted from the employee's salary and remitted by the employer. It doesn't increase the cost to the company.
When does pension become compulsory?
Under the Pension Reform Act 2014, employers with 3 or more employees must pay 10% employer pension and deduct 8% from employees.
Related guides
- Payroll in Nigeria: a first-time employer's guide (PAYE, pension, NHF, NSITF, ITF)
- Employee or contractor? Tax, pension and legal risk for Nigerian companies
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