Payroll Software for Nigeria, Built for Scale
For companies operating in Nigeria, payroll is a time-consuming, costly process exposed to compliance risks. Popay fixes that. Our cloud-based HR software automates PAYE calculations, pension remittances and all statutory deductions, so your teams can focus on growth, not firefighting.
Why payroll processing in Nigeria breaks most systems
Running payroll in Nigeria means juggling PAYE tax calculations across 36 states, pension contributions to PFAs with 7 working days remittance deadlines, NSITF filings, NHIA for all private sector employers, and an ITF levy that catches most employers off guard.
The new Nigeria Tax Act 2025 (effective January 2026) rewrote the rulebook: new tax bands, abolished CRA, fresh deduction rules. Most payroll systems weren’t built for this complexity.
Popay’s cloud-based payroll platform was. Every statutory deduction, every salary calculation, every regulatory update, automated and always current.
Dive into...
- PAYE tax calculations, statutory deductions & pension remittance
- Employment contracts & compliance automation
- Leave management, employee self-service portal, labour unions, collective agreements & employer obligations
Your payroll roadmap in Nigeria
The national minimum wage was raised by 133%, to ₦70,000 /month based on 8 hours per day, 5 days per week. Effective May 1, 2024 (retroactive). Any payroll system not updated is generating non-compliant payslips right now. Applies to establishments with 25 or more employees.
Nigeria at a Glance
- Capital
- Abuja
- Local Currency
- Nigerian Naira (NGN / ₦)
- Official Languages
- English
Hausa, Yoruba, and Igbo widely spoken
- Pay Frequency
- Monthly (most common)
- GDP Growth
- +3.9%
- Standard VAT
- 7.5%
Second time in a decade exceeding 4% (excl. post-pandemic rebound)
Lowest among major African economies
- Minimum Wage
-
₦70,000 / month
Effective May 1, 2024 (signed into law July 29, 2024, retroactive). +133% - Employer Contributions
- Pension 10%, NSITF 1%, ITF 1%, NHIA 10%
- Contract Termination
- 1 day to 1 month notice
Based on 8 hours/day, 5 days/week. Applies to establishments with 25+ employees.
Rates vary; some apply above certain thresholds
Depends on length of service
- Employee Protection
- Moderate (Labour Act 2004 + strong union influence: NLC, TUC)
Automated tax calculations, statutory deductions & pension remittance
This is where most payroll processing breaks down. Employers in Nigeria must register and remit to multiple statutory bodies: PFA for pension contributions (7 working days deadline), NSITF for employee compensation, NHIA for health insurance (National Health Insurance Authority, renamed under the 2022 Act), ITF for vocational training, and monthly PAYE to the relevant State Internal Revenue Service (SIRS). Miss a PAYE deadline and penalties stack up fast. Late filing of returns: ₦100,000 for the first month, ₦50,000 for each subsequent month. Late remittance (past the 21st of the following month): 10% per annum on the unremitted tax plus interest at the CBN monetary policy rate. Popay’s payroll platform handles every salary calculation and statutory deduction automatically. No spreadsheets, no missed deadlines.
Statutory Contributions in Nigeria
- Pension (CPS)
-
Employer: 10%
Employee: 8% - NSITF (ECS)
-
Employer: 1%
Employee: 0% - NHIA (Health Insurance)
-
Employer: 10%
Employee: 5%
Of monthly emoluments (basic salary + housing + transport). Remit within 7 working days.
Of total monthly payroll. Annual filing due February 28.
Mandatory for all private sector employers. Based on total basic salary.
- ITF (Industrial Training Fund)
-
Employer: 1%
Employee: 0% - NHF (National Housing Fund)
-
Employer: 0%
Employee: 2.5%
Of annual payroll. Mandatory for 5+ employees or ₦50M+ turnover.
Of basic salary. Voluntary for private sector since February 2023.
PAYE Tax Bands — Nigeria Tax Act 2025 (effective Jan. 2026)
| Annual Taxable Income (₦) | Tax Rate |
|---|---|
| Up to ₦800,000 | 0% (Tax-Free) |
| ₦800,001 – ₦3,000,000 | 15% |
| ₦3,000,001 – ₦10,000,000 | 18% |
| ₦10,000,001 – ₦25,000,000 | 21% |
| ₦25,000,001 – ₦50,000,000 | 23% |
| Above ₦50,000,000 | 25% |
Note: Pension, NHF, and NHIA contributions are deducted before PAYE calculation. The Consolidated Relief Allowance (CRA) has been abolished. New Rent Relief: 20% of annual rent paid, capped at ₦500,000.
Want to learn more?
Don’t wait: book a meeting with Jacob Louis now. He will guide you, answer all your questions, and help clarify your HR obligations in Nigeria.
Your Nigerian payroll processing, mastered from A to Z.
Popay's cloud-based payroll system automates everything: compliant payslips, PAYE tax calculations, pension remittances, NSITF, NHIA, ITF contributions, direct deposit to employee bank accounts, and full Labour Act compliance. Integration with your existing HRIS, ERP, and performance management tools comes built-in. Employee self-service portal for payslips, leave requests, and tax certificates.
Employment contracts & onboarding compliance
The Labour Act of 2004 governs employment contracts in Nigeria, and getting onboarding wrong creates compliance risk from day one. Written contracts must be provided within 3 months of hire. Your employee management software should auto-generate compliant contracts with all mandatory clauses. The Act primarily applies to “Workers” (manual/clerical employees), while “Non-Workers” (executives, professionals) follow individual contract terms. Popay’s HR software manages both categories and tracks every contractual obligation.
Employment Contracts in Nigeria
- Contract Types
- Permanent (default, open-ended) / Fixed-term (must be written)
- Notice — up to 3 months
- 1 day's notice
- Notice — up to 2 years
- 1 week's notice
Written contract required within 3 months of hire
For employees with up to 3 months of service
Notice > 1 week must be in writing
- Notice — up to 5 years
- 2 weeks' notice
- Notice — 5+ years
- 1 month's notice
Same for employer and employee
Payment in lieu of notice is acceptable
- Mandatory Clauses
- Job description, compensation, working hours, place of work, leave entitlements, termination procedures, manner of notice, wage payment terms
- Summary Dismissal
- Permitted for grave misconduct: violence, theft, fraud, bribery, gross insubordination, serious negligence, or abandonment of duty. Employers must adopt the Principle of Fair Hearing before any dismissal.
All contracts must include these elements. Place of work is essential for State Tax (PAYE) and prevents illegal forced transfers. Manner of notice defines how termination letters must be sent to be legally received.
Employee protection rights apply. The NICN (National Industrial Court) strictly enforces Fair Hearing. Wrongful dismissal may result in damages.
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Leave management & employee rights in Nigeria
Leave management is where compliance gets personal. The Labour Act guarantees statutory minimums for annual leave, maternity leave, and sick leave, but many companies offer more generous terms through contracts or collective agreements. Your payroll solution needs to track every entitlement, calculate accruals accurately, and give employees self-service access to their leave balances. Popay’s employee self-service portal handles this automatically, with real-time reporting and analytics for HR teams.
Types of Leave in Nigeria
- Annual Paid Leave
- Minimum 6 working days/year. Eligibility: after 12 months of continuous service
- Maternity Leave
- 12 weeks (6 before + 6 after). Pay: at least 50% of wages. Eligibility: 6+ months of service
- Sick Leave
- Up to 12 working days/year. Requires medical certificate. Full pay.
Many formal employers offer 15–25 days in practice
Protection against dismissal during maternity absence
Statutory minimum under the Labour Act
- Paternity Leave
- Not statutory. Up to 14 days (federal civil service: 14 days, Lagos State: 10 days, private sector varies)
- Time-off for Nursing
- 30 minutes twice daily during working hours
- Contract Protection
- No dismissal during maternity absence. Sick leave suspends contract. Employee must be reinstated upon return.
No statutory provision yet — contractual or policy basis
Section 54 of the Labour Act
Employee protection during leave periods
Free demo
In 30 minutes, see how Popay's payroll software handles your Nigerian payroll processing: with reporting and analytics dashboards built for HR teams and CFOs.
Labour unions, collective agreements & what your payroll system must handle
Nigeria has a strong trade union tradition led by the NLC (Nigeria Labour Congress) and TUC (Trade Union Congress), and their agreements directly impact your payroll processing. Sectoral unions negotiate wages, allowances (housing, transport, hazard), overtime premiums, and benefits that your payroll software must calculate correctly. Getting a collective agreement wrong doesn’t just mean a payslip error, it means a case before the National Industrial Court. Popay’s HR management platform maps every sectoral rule to your payroll configuration.
Key Labour Unions & Sectors in Nigeria
- NLC & TUC (National umbrella)
- National umbrella organizations
- Banking & Financial Services
- NUBIFIE (junior/non-management staff); ASSBIFI (senior staff)
- Oil & Gas
- PENGASSAN, NUPENG
All sectors: federal, state, and private. Minimum wage negotiations, policy advocacy, strike coordination. (Negotiated the ₦70,000 minimum wage in 2024)
Banks, insurance, financial institutions. Sector-specific wage scales, performance bonuses.
Upstream, downstream, services. Enhanced wages, hazard allowances, housing. (Highest-paying sector. Strong bargaining power)
- Manufacturing & Food
- NUFBTE
- Aviation & Transport
- NUATE, NURTW
Food, beverages, tobacco manufacturing. Overtime premiums, shift allowances.
Air and road transport. Sector-specific safety and wage provisions. (Regulated strike procedures)
- Key Framework
- Governed by: Trade Unions Act, Trade Disputes Act. Court: National Industrial Court (exclusive jurisdiction). Right to strike protected with procedural requirements. Employers must allow union membership.
Every employer must issue payslips compliant with the Labour Act, including all mandatory information (position, salary, overtime, statutory deductions, net pay, allowances). Your payroll software should generate these automatically. Payroll records must be maintained for at least 6 years. A cloud-based system with digital archiving makes this effortless.
PAYE must be remitted by the 10th of the following month to the relevant State Internal Revenue Service (SIRS). Pension contributions go to the PFA within 7 working days via direct deposit. Standard working hours are typically 8 hours/day, 40 to 48 hours/week depending on sector and collective agreement (the Labour Act does not prescribe a universal maximum). Your attendance tracking system must log hours accurately for overtime calculations. Identify and apply the correct collective agreement for your sector. A scalable payroll platform like Popay handles all of this from a single dashboard.
The Labour Code is evolving. Are you ready?
The Nigeria Tax Act 2025 took effect on January 1, 2026: new PAYE tax bands, abolished CRA, ₦800,000 tax-free threshold, Rent Relief deductions. If your payroll software wasn't updated, every payslip issued since is wrong. Late PAYE remittance: ₦100,000 for the first month, then ₦50,000 for each subsequent month. Discussions continue on Labour Act reforms and digitalization of NRS (formerly FIRS) filings.
Popay helps you anticipate and adapt with:
- Automatic regulatory updates
- Compliance always up to date
- Local & dedicated support
Present in Morocco and 40+ countries
We are proud to be the reference HR partner across Africa. Thanks to our local expertise and digital tools, we simplify HR management and legal compliance for every subsidiary.
Regions covered : South Africa, Zimbabwe, Ghana, Kenya, Ivory Coast, Senegal, Morocco, Tunisia, Egypt, etc.
Take 30 minutes with Jacob Louis
Book a call to discover our platform, our integrations, and how Popay can simplify your HR and legal management in Nigeria.
In HR, human connection matters.
With Jacob Louis, relationships build naturally. Whether analysing your HR challenges, supporting your projects, or answering your questions, he fully embodies Popay’s human values: listening, proximity, and sincerity.
