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UPDATED NOV 5, 2026💡 Everything you need to know to hire and manage employees in Nigeria through Toku. Toku handles payroll processing, tax withholding, social contributions, and statutory compliance. This guide covers what you need to plan costs and manage your team.
At a Glance
| Item | Detail |
|---|---|
| Currency | Nigerian Naira (NGN) |
| Payroll cycle | Monthly. Toku runs one payroll per month in Nigeria. |
| Estimated employer costs on top of salary | Approximately 12-14%, plus health insurance and group life cover |
| Onboarding lead time | 7-10 business days |
| Standard working week | 40-48 hours over 5-6 days |
| Probation period | Set in the employment agreement, typically 3-6 months |
| Annual leave | For workers covered by the Labour Act, at least 6 working days after 12 months of continuous service. Coverage depends on the role; Toku will confirm the entitlement and any additional contractual leave. |
| 13th month salary | Not required |
| Minimum notice on termination | 1 day to 1 month depending on length of service (contracts often set longer) |
Onboarding a New Hire
Plan for 7-10 business days between submitting a new hire and their start date. Before day one, Toku completes pension registration with PenCom (your new hire provides or receives an RSA PIN with a Pension Fund Administrator), tax registration (the employee provides their TIN), and enrollment in an HMO health insurance plan.
Submit the new hire through the Toku platform for the employment agreement, statutory registrations and payroll setup. See Onboard Contributors as a Client Admin in Toku for the steps. Toku will confirm the expected onboarding timing for your hire.
Employer Costs
On top of gross salary, employers in Nigeria pay the following:
| Cost | Rate | Notes |
|---|---|---|
| Pension (Contributory Pension Scheme) | 10% | Calculated on pensionable emoluments (basic salary plus housing and transport allowances) |
| National Social Insurance Trust Fund (NSITF) | 1% of monthly payroll | Covers workplace injuries; employer-only |
| Industrial Training Fund (ITF) | 1% of annual payroll | Applies to qualifying employers |
| Health insurance (HMO) | Plan-dependent | Mandatory enrollment under the NHIA Act for employers with 5 or more employees |
| Group life insurance | Policy-dependent | Mandatory cover of at least 3 times annual total emoluments |
As a rule of thumb, total cost of employment is roughly 112-114% of gross salary, before health insurance and group life premiums. There is no mandatory 13th month salary in Nigeria.
Employees pay their own pension contribution (8% of pensionable emoluments) and PAYE income tax (0-25% under the graduated bands effective January 2026, with income up to NGN 800,000 per year fully exempt). National Housing Fund contributions (2.5% of basic salary) are voluntary for private sector employees. These are withheld from gross salary, not charged on top. Toku calculates and remits all of the above.
Compensation & Payroll
Toku runs one payroll per month in Nigeria, and employees receive a payslip each cycle showing gross pay, all deductions, and net pay. The national minimum wage is NGN 70,000 per month. There is no statutory 13th month salary, though some sectors offer annual bonuses by policy. Salaries are paid in NGN by electronic bank transfer.
Employment Contracts & Probation
- Toku issues a compliant local employment agreement, in English, for every hire.
- Employment types include permanent and fixed-term. Fixed-term contracts are permitted without statutory limits on duration or renewals, though repeated renewals can create an expectation of permanent employment.
- Probation is set in the employment agreement. Nigerian statute does not prescribe a probation period; 3-6 months is the typical contractual range, with shorter notice during probation as specified in the agreement.
Working Hours
The standard workweek is 40-48 hours (typically 8 hours per day over five or six days). Nigerian law does not set a rigid statutory maximum, but employees working 6 or more hours in a day must receive at least 1 hour of rest breaks in aggregate, and everyone is entitled to at least one rest day per 7-day period. There is no statutory overtime rate; overtime pay is set by the employment agreement.
Leave Entitlements
| Leave | Entitlement | Who pays |
|---|---|---|
| Annual leave | For workers covered by the Labour Act, at least 6 working days after 12 months of continuous service. Coverage depends on the role; Toku will confirm the entitlement and any additional contractual leave. | Employer |
| Sick leave | For workers covered by the Labour Act, up to 12 paid working days in a calendar year for certified temporary illness, subject to conditions. Coverage depends on the role; Toku will confirm the applicable entitlement. | Employer, where applicable |
| Maternity leave | Protections include leave before birth and six weeks after birth. The statutory pay rule requires at least six months of continuous service and other conditions. Toku will confirm the applicable entitlement and pay. | Employer, where applicable |
| Paternity leave | Not mandated by statute for the private sector | N/A |
Under the Labour Act maternity pay rule, six months of continuous service is a condition for statutory pay, not a blanket condition for leave. Toku will confirm the applicable rules, documents and any more favorable contractual terms. Paternity and bereavement leave depend on applicable law and company policy; ask Toku what applies to the hire.
Public Holidays (2026)
Nigeria observes approximately 13 public holiday days in 2026. Islamic holiday dates are provisional and depend on moon sighting, so they may shift by a day or two.
| Date | Holiday |
|---|---|
| January 1 | New Year's Day |
| March 19 | Eid al-Fitr |
| March 20 | Eid al-Fitr Day 2 |
| April 3 | Good Friday |
| April 6 | Easter Monday |
| May 1 | Workers' Day |
| May 27 | Eid al-Adha |
| May 28 | Eid al-Adha Day 2 |
| June 12 | Democracy Day |
| August 25 | Id el-Maulud (estimated) |
| October 1 | National Independence Day |
| December 25 | Christmas Day |
| December 26 | Boxing Day |
Benefits: Required vs. Common Extras
Statutory (included in employer costs above): the Contributory Pension Scheme, NSITF coverage for workplace injuries and occupational diseases, mandatory health insurance under the NHIA Act, and group life insurance of at least 3 times annual total emoluments.
Toku offers fully sponsored international health coverage through Remote Health. See Remote Health, Your Global Insurance Plan for coverage details and enrollment.
Common extras in the Nigerian market include enhanced private health insurance (HMO plans above the basic requirement), housing allowances, transport allowances, meal subsidies, and annual performance bonuses. Most non-cash benefits are taxable to the employee; Toku can advise on the cost impact of any benefits you want to add.
Ending Employment
Nigeria permits termination with notice, but the reason and process matter, and wrongful termination claims can be brought before the National Industrial Court. Involve Toku early so notice, documentation, and final pay are handled correctly. For the process, see How to Terminate an Employee or Contractor.
| Service | Notice |
|---|---|
| Less than 3 months | 1 day |
| 3 months to 2 years | 1 week |
| 2 to 5 years | 2 weeks |
| 5 years or more | 1 month |
These are statutory minimums; the employment agreement often sets longer notice, and the longer period prevails. Payment in lieu of notice is permitted. There is no general statutory severance for standard terminations. Redundancy payments are governed by the contract or policy, and redundancies must follow a "last in, first out" principle, with accrued leave and any outstanding amounts paid out.
Annual Leave at Termination
This section describes statutory annual leave. Any additional contractual or company-provided leave above the statutory minimum may follow different carryover, expiry, or payout rules under the employee's agreement or applicable policy, subject to local law.
Statutory leave termination payout: Generally payable where accrued statutory or contractual leave remains outstanding.
Statutory carryover / look-back: Carryover and expiry are heavily influenced by the written employment terms and leave policy; there is no simple universal calendar-year rule to rely on.
Admin responsibility: Keep the leave policy explicit, track statutory and enhanced leave separately, and monitor historic balances rather than allowing them to accumulate without review.
Important exceptions: Because contractual terms can materially affect the result, Toku should confirm historic balances and the applicable policy before final termination amounts are communicated.
See the Annual Leave / PTO Carryover & Termination Payout Guide for the cross-country framework.
Hiring Someone from Overseas?
Foreign nationals need work authorization: the main route is the Subject to Regularisation (STR) Visa followed by the Combined Expatriate Residence Permit and Aliens Card (CERPAC), and the employer must hold an Expatriate Quota position for the role. A Temporary Work Permit covers short assignments of up to 90 days. Talk to Toku before extending an offer to a candidate who needs sponsorship.
Last updated November 5, 2026 (onboarding link and leave guidance only). Last verified July 2026. This guide is for general information and doesn't constitute legal or tax advice. Your Toku account manager can confirm specifics for your situation.