Every cost that sits on top of salary
Some of these are statutory and non-negotiable. Others are market expectations you will pay one way or another. Plan for all of them before you make an offer.
Gross salary
Whatever you agree, but never below ₦70,000/monthThe National Minimum Wage Act 2024 sets ₦70,000 per month as the floor for employers with 25 or more staff. Most employers apply it across the board.
Employer pension
Minimum 10% of basic + housing + transportEmployee contributes 8%, employer contributes at least 10%. It is calculated on basic, housing and transport — not on gross pay.
NSITF (Employee Compensation)
1% of total monthly payrollPaid entirely by the employer to the Nigeria Social Insurance Trust Fund. It covers workplace injury and death.
ITF (Industrial Training Fund)
1% of annual payrollApplies to employers with 5 or more staff, or turnover of ₦50 million and above. Paid once a year by 1 April.
NHF (National Housing Fund)
2.5% of basic — employee opt-inDeducted from the employee, not an employer cost, but you must remit it and keep the written election on file.
PAYE
0%–25% of chargeable incomeDeducted from the employee's pay and remitted to the state internal revenue service by the 10th of the following month. It affects the take-home your offer needs to hit.
Leave allowance & 13th month
Commonly 8%–10% of annual basicNot statutory, but the market expects it. Budget for it or you will be renegotiating in December.
Health cover (HMO)
₦60,000–₦250,000 per staff per yearTypical Nigerian HMO plans for a single employee. Family plans cost more.
Onboarding & tools
₦150,000–₦600,000 one-offLaptop, phone line, software seats, ID, training time. Spread it over the first year when you budget.
Cost of hiring
5%–20% of first-year salaryAdvertising, assessment tools, recruiter fees and the hours your managers spend interviewing.
Worked example: one employee on ₦300,000 a month
A mid-level officer in Lagos on a gross of ₦300,000 per month, where basic, housing and transport make up 70% of gross. PAYE and the employee's own 8% pension come out of the employee's pay, so they are not added here — this table is what leaves the employer's account.
| Cost line | Monthly | Annual |
|---|---|---|
| Gross monthly salary | ₦300,000 | ₦3,600,000 |
| Basic + housing + transport (assume 70% of gross) | ₦210,000 | ₦2,520,000 |
| Employer pension at 10% | ₦21,000 | ₦252,000 |
| NSITF at 1% of payroll | ₦3,000 | ₦36,000 |
| ITF at 1% of payroll | ₦3,000 | ₦36,000 |
| Leave allowance / 13th month (approx. 8% of basic) | ₦14,000 | ₦168,000 |
| HMO cover | ₦10,000 | ₦120,000 |
| Onboarding & tools (spread over year one) | ₦25,000 | ₦300,000 |
| Total employer cost | ₦376,000 | ₦4,512,000 |
That is roughly 25% above the ₦3.6m salary line — before recruitment fees. Rates and HMO pricing vary, so treat this as a planning model and confirm your own numbers with your PFA, HMO and state IRS.
Five costly mistakes employers make
- Budgeting the gross salary only, then discovering pension, NSITF and ITF after the offer is signed.
- Calculating pension on gross pay instead of basic + housing + transport, and overpaying every month.
- Skipping NSITF or ITF because nobody has asked yet — both carry penalties and back-payment on audit.
- Promising a net take-home figure without running PAYE first, then absorbing the tax yourself.
- Forgetting the cost of the role staying empty: unfilled sales or delivery roles usually cost more than the salary.
Frequently asked questions
What is the minimum wage in Nigeria in 2026?
The National Minimum Wage Act 2024 sets ₦70,000 per month. It applies to employers with 25 or more employees, though most employers apply it across the board to stay competitive.
How much does an employee really cost above their salary in Nigeria?
Budget roughly 20% to 30% above gross salary in year one. Employer pension (10% of basic, housing and transport), NSITF (1% of payroll), ITF (1% of payroll), leave allowance, HMO cover and onboarding tools make up most of the difference.
Is the employer pension contribution 10% or 18%?
The employer pays a minimum of 10% and the employee 8%, giving a combined 18% of basic, housing and transport. An employer may carry the full 18% if it chooses, but 10% is the legal minimum.
Who pays NSITF and ITF — the employer or the employee?
Both are employer-only costs. NSITF is 1% of monthly payroll to the Employee Compensation Scheme. ITF is 1% of annual payroll for employers with 5 or more staff or ₦50 million turnover, due by 1 April each year.
Do I have to deduct NHF from every employee?
No. Under the 2026 rules the 2.5% National Housing Fund deduction is opt-in. Capture each employee's written election and keep it on file.
Want these numbers modelled for your own payroll?
SteadyStrides builds employer cost models, payroll structures and compliance checks for organisations across Nigeria — so your budget, your offers and your remittances agree with each other.