Payroll Calculator
Calculate total employer payroll cost including mandatory pension (10%) and NSITF (1%) contributions for your Nigerian workforce.
Workforce Details
₦
Total Monthly Payroll Cost
₦2,775,000
Total Cost per Employee
₦277,500
Gross Salary per Employee
₦250,000
Employer Pension (10%)
₦25,000
NSITF (1%)
₦2,500
Annual Payroll Cost
₦33,300,000
NHF (2.5% of basic salary) is deducted from the employee's pay, not an additional employer cost. PAYE tax is also deducted from employees — use our PAYE Calculator for individual tax computations.
How to Use This Calculator
Enter the number of employees and their average gross monthly salary. The calculator shows total payroll cost per employee (including mandatory employer contributions) and total monthly cost for your entire workforce.
For businesses with multiple salary bands, run the calculator separately for each group and sum the results.
Nigerian Employer Payroll Obligations
Employer Pension Contribution = Gross Salary × 10%
NSITF (Workers' Compensation) = Gross Salary × 1%
Total Employer Cost per Staff = Gross Salary + Pension(10%) + NSITF(1%)
= Gross Salary × 111%
NHF (2.5% of basic salary) is deducted from employee pay —
not an additional employer cost, but must be remitted to FMBN.
PAYE tax is also deducted from employee gross salary.
Example
Tech Startup with 10 Employees — Average Salary ₦250,000/month
Gross Salary (per employee)₦250,000
Employer Pension (10%)₦25,000
NSITF (1%)₦2,500
Total Cost per Employee₦277,500
Total Monthly (10 staff)₦2,775,000
Annual Payroll Cost₦33,300,000
At ₦250,000 average gross salary, each employee actually costs ₦277,500/month — 11% more than the salary figure. Factor this into your business budget and cash flow projections.
FAQ
Nigerian employers must contribute: (1) Pension — 10% of employee gross emolument (basic + housing + transport) per the Pension Reform Act 2014. (2) NSITF — 1% of total monthly payroll to the Nigeria Social Insurance Trust Fund for workers' compensation. (3) ITF — 1% of annual payroll (if 25+ employees or 5+ with ₦50M+ turnover). Additionally, employers must deduct and remit PAYE tax and NHF (2.5% of basic) from employees.
The Contributory Pension Scheme (CPS) applies to all employers with 3 or more employees in Nigeria. Both employer (minimum 10%) and employee (minimum 8%) must contribute. Employers must enroll staff within 3 months of resumption and remit contributions within 7 working days after salary payment. Non-compliance attracts penalties of up to 2% per month on outstanding contributions plus possible prosecution by PENCOM.
No — PAYE is deducted from the employee's gross salary (not an additional employer cost) and varies significantly based on individual salary, allowance structure, and reliefs. Use our PAYE Tax Calculator to compute exact tax for each employee. The total employer cost shown here is purely the employer's out-of-pocket expenditure above gross salary.