Employment in Nigeria is governed mainly by the Labour Act, which sets minimum terms for manual and clerical workers, together with the Pension Reform Act, the Employee's Compensation Act and the Nigeria Tax Act 2025. Managers and professionals are covered mostly by their contracts. Here is what employers need to know about leave, pay, tax and ending employment.
The Labour Act sets low statutory minimums, and most employers offer considerably more through contracts, handbooks or collective agreements. The statutory figures below are the floor, not market practice.
Working days of paid holiday after 12 months of continuous service. Young workers under 16 are entitled to 12 working days. In practice, 15–20 days or more is common.
Up to 12 working days a year at full pay, supported by a certificate from a registered medical practitioner.
6 weeks before and 6 weeks after birth. An employee with at least 6 months' service is paid at least 50% of her wages during this leave.
There is no statutory paternity or parental leave for private sector employees. Federal public servants receive paternity leave under the Public Service Rules, and many private employers now offer a short period of paid paternity leave as a policy.
A nursing mother is entitled to paid breaks of half an hour twice a day during working hours to nurse her child.
Set up your own Nigerian leave policy in IceHrm, from annual and sick leave to maternity and paternity leave, each with its own accrual, carry forward and approval rules. Employees see their live balance before they apply, and managers see who is away on a shared team calendar. Leave management →
The National Minimum Wage (Amendment) Act 2024 set the current national minimum wage and shortened the review cycle to every 3 years.
In force since July 2024. Employees earning no more than the minimum wage are exempt from income tax.
The Labour Act leaves normal hours to agreement or collective bargaining. Monday to Friday, 8 hours a day is the common pattern.
The Labour Act does not set an overtime premium. Overtime rates are fixed by the employment contract or the applicable collective agreement, so state them clearly in your contracts and policies.
Capture attendance and overtime in IceHrm and feed the hours straight into payroll, so contractual overtime rates reflect what was actually worked. Time & attendance →
The Nigeria Tax Act 2025 replaced the old personal income tax bands from 1 January 2026. Employers deduct tax from each salary payment under PAYE and remit it to the tax authority of the state where the employee is resident.
| Annual taxable income | Rate |
|---|---|
| First NGN 800,000 | 0% |
| Next NGN 2,200,000 (to NGN 3m) | 15% |
| Next NGN 9,000,000 (to NGN 12m) | 18% |
| Next NGN 13,000,000 (to NGN 25m) | 21% |
| Next NGN 25,000,000 (to NGN 50m) | 23% |
| Above NGN 50,000,000 | 25% |
The old consolidated relief allowance has been abolished. Employee pension contributions remain deductible, and a rent relief is available on rent paid for the employee's home.
The main statutory employer costs are pension, employee compensation insurance and the training levy.
Of monthly emoluments (basic, housing and transport), with a further 8% from the employee, paid into the employee's retirement savings account. Applies to private employers with 3 or more employees. PenCom has proposed higher rates, so check for updates.
Of total monthly payroll, paid by the employer to fund compensation for work-related injury, disease and death.
Of annual payroll, for employers with 5 or more employees, or fewer with a turnover of NGN 50 million or more.
Build Nigerian pay the way you already structure it, with your own salary components, deductions and formula columns, such as pension and NHF deduction columns. Want to know how well IceHrm handles payroll calculations for Nigeria? Contact us or see Payroll →
Either party can end an employment contract by giving the notice required by the contract or the Labour Act. Nigerian courts increasingly expect a fair reason and a fair process, and the National Industrial Court can award compensation for unfair labour practices, so document the reason for every dismissal.
| Continuous service | Notice |
|---|---|
| 3 months or less | 1 day |
| More than 3 months, less than 2 years | 1 week |
| 2 years, less than 5 years | 2 weeks |
| 5 years or more | 1 month |
There is no statutory formula for redundancy pay. Under the Labour Act the employer must inform the workers' union, apply the "last in, first out" principle subject to skill and efficiency, and negotiate redundancy pay. Amounts are usually set by the contract, handbook or collective agreement.
Final pay should include wages to the last day and any accrued benefits due under the contract. Employees also keep their accrued pension savings in their retirement savings account.
Public holidays are declared by the federal government under the Public Holidays Act. Dates of the Islamic holidays depend on the lunar calendar and are confirmed by announcement each year.
When a holiday falls on a weekend, the government usually declares the following working day a holiday. Some states also observe their own holidays.
Leave groups give each office its own holiday calendar, so you can add each year's confirmed Eid dates and any state holidays, and every team gets the right days off. Holiday calendars →
Under the Labour Act, an employer must give each worker a written statement of the main terms of employment no later than 3 months after the start of employment. Giving a written contract at the start is best practice.
The law does not set a probation period. Probation of 3–6 months is common and should be stated in the contract. Fixed-term contracts are allowed; the Labour Act does not set a maximum duration.
Send contracts for e-signing, store them on the employee's record, and track onboarding with task lists so pension and tax details are collected before the first payroll. Documents & e-signing →
This guide is general information to help you plan HR processes, not legal, tax or financial advice. Employment law and rates change regularly and awards, enterprise agreements and state rules may give employees more than the minimums shown here. Always confirm current requirements with the official sources or a qualified adviser.
Configure leave types, accrual rules and public holidays for Nigeria, keep employee records and contracts in one place, and run payroll with your own salary components. Want to know how IceHrm handles payroll calculations for Nigeria? Talk to us.
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