Every Nigerian employer is legally obligated to deduct and remit certain statutory contributions on behalf of employees. Getting this wrong — even unintentionally — can result in penalties, back payments, and regulatory trouble. Here is a clear breakdown of what is required.
PAYE (Pay As You Earn)
PAYE is income tax deducted at source and remitted to the relevant State Internal Revenue Service (SIRS) monthly. The rate is progressive — ranging from 7% on the first ₦300,000 of annual income to 24% on income above ₦3.2 million. HR teams must calculate this accurately every month and file returns by the 10th of the following month.
Pension Contributions (PFA)
Under the Pension Reform Act 2014, employers with 15 or more employees must enrol staff in a Contributory Pension Scheme. The minimum contribution is 8% from the employee and 10% from the employer, based on monthly emolument (basic salary + housing + transport). Contributions must be remitted to the employee's Pension Fund Administrator (PFA) within 7 days of salary payment.
National Housing Fund (NHF)
Employees earning ₦3,000 or more per month must contribute 2.5% of their basic salary to the Federal Mortgage Bank of Nigeria through the NHF scheme. This is deducted by the employer and remitted monthly.
NSITF (Nigeria Social Insurance Trust Fund)
Employers contribute 1% of each employee's total monthly payroll to the NSITF. This funds compensation for workplace injuries and occupational diseases.
ITF (Industrial Training Fund)
Employers with 5 or more staff, or an annual turnover of ₦50 million and above, must contribute 1% of their annual payroll to the ITF. This is assessed annually, not monthly.
Practical Tips for HR Teams
Keep employee PFA details on file and update them promptly when employees switch PFAs. Set calendar reminders for remittance deadlines — late payments attract penalties. And always issue payslips that clearly show each deduction, both for compliance and employee trust.
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