Understanding market competitive salaries is crucial for both employers and employees in Nigeria. It ensures fair compensation for employees while maintaining business sustainability for employers. This guide explores key aspects of market competitive salaries in the Nigerian context.

Factors Influencing Market Competitive Salaries

Several factors influence what constitutes a competitive salary in Nigeria. Here are some key considerations:

• Industry: Different industries have varying salary structures. For instance, the Oil & Gas and Finance sectors typically offer higher salaries compared to Education or Social Care.
• Location: Cost of living varies across Nigerian cities. Lagos, the economic hub, generally offers higher salaries to compensate for living expenses.
• Job Title & Experience: Specific job titles and experience levels within a role significantly impact salary offers. Senior positions and those requiring specialized skills command higher salaries.
• Education & Qualifications: Educational background and relevant professional qualifications can influence an employee's earning potential.

Researching Market Competitive Salaries

There are several ways to research market competitive salaries in Nigeria:

• Salary Surveys: Reputable organizations conduct periodic salary surveys in Nigeria. These surveys provide valuable insights into average and competitive salary ranges for various job roles across industries and locations.
• Job Boards & Recruitment Websites: Many online job boards and recruitment websites in Nigeria advertise positions with salary ranges. This can provide a good starting point for researching salaries within your field.
• Networking: Connecting with professionals in your industry can offer valuable insights into current salary trends.

Nigeria has a national minimum wage established by the National Minimum Wage Act. This legislation sets a benchmark for employee compensation, ensuring a baseline level of income protection.

Key Points of the National Minimum Wage Act

The Act mandates every employer (with some exceptions) to pay a minimum wage not less than the nationally set amount. As of September 1st, 2023, the national minimum wage in Nigeria is NGN65,000 per month. It's important to note that this is a temporary measure. The base minimum wage remains NGN30,000, with an additional NGN35,000 awarded as a wage subsidy for six months starting September 2023.

Exemptions from Minimum Wage

The National Minimum Wage Act exempts certain categories of workers from the minimum wage provisions:

• Part-Time Workers: Employees working less than 40 hours per week are not covered under the minimum wage.
• Commission-Based Workers: Workers whose primary income comes from commissions or piece rates are exempt.
• Seasonal Workers: Employees in seasonal occupations like agriculture may not be covered.
• Specific Industries: Workers in Merchant Shipping, Civil Aviation, and establishments with less than 25 employees might have different minimum wage rules.

Enforcement and Penalties

The National Minimum Wage Act outlines penalties for non-compliance. Employers who fail to pay the minimum wage can be subjected to fines.

In Nigeria, employee compensation extends beyond the basic salary. Various bonuses and allowances are offered by businesses to attract and retain top talent, while also adhering to labor regulations.

Statutory Benefits

Certain benefits are mandated by Nigerian law that employers must provide to their workers. These include:

• Paid Time Off: Employees are entitled to between 6 and 12 days of paid annual leave, depending on their length of service. Additionally, there are 11 national holidays for which employees receive paid time off.
• Sick Leave: Employees can take up to 12 days of paid sick leave per year upon providing a medical certificate after two days of absence.
• Maternity Leave: Female employees are entitled to 12 weeks of maternity leave at half pay.
• Pension Fund Contributions: Both employers and employees contribute to a pension fund, ensuring financial security after retirement.
• Life Insurance: Employers are required to provide some level of life insurance for their employees.
• Workmen's Compensation: This insurance provides financial support to employees who are injured or become ill due to work-related causes.

Common Allowances

In addition to statutory benefits, employers in Nigeria often provide allowances to cover work-related expenses. These include:

• Housing Allowance: This helps employees offset the cost of rent or mortgage payments.
• Transportation Allowance: This allowance can be a fixed amount or cover the cost of commuting to and from work, either through a transportation stipend or company-provided transportation.
• Meal Allowance: Some companies offer a meal allowance to help employees cover the cost of lunch or other meals during work hours.
• Mobile Phone Allowance: This may be a fixed amount to help cover phone bills or the company may provide a phone and service plan.

Performance-Based Bonuses

Many companies in Nigeria offer bonuses to incentivize employees and reward them for exceeding expectations. These can include:

• Annual Bonus: A year-end bonus based on the company's overall performance and the employee's individual contributions.
• Performance-Based Bonus: A bonus tied directly to an employee's achievement of specific goals or exceeding set targets.
• 13th-Month Bonus: Though not mandated by law, some companies offer a bonus equivalent to one month's salary, often paid in December.

Nigerian businesses adhere to specific regulations and practices when it comes to managing their payroll cycles. Understanding these practices is crucial for both employers and employees.

Frequency of Payment

The Nigerian Labour Act mandates that employees are paid at least once a month. However, companies have the flexibility to choose a specific pay frequency that works best for them and their employees. Common payroll cycles in Nigeria include:

• Monthly: This is the most common payroll cycle in Nigeria, providing employees with a predictable income stream.
• Bi-weekly (Twice a Month): Some companies opt for bi-weekly payments, offering employees more frequent access to their earnings.
• Weekly: Less common but still practiced by some organizations, particularly those with hourly workers who may prefer more frequent payouts.

Important Dates in the Payroll Cycle

There are several key dates to consider within a Nigerian payroll cycle:

• Salary Calculation: This involves determining gross pay, deductions, and net pay for each employee based on their work hours, allowances, and any applicable taxes.
• Payday: This is the date on which employees receive their net salary. The specific date can vary depending on the company's chosen pay cycle.
• PAYE (Pay As You Earn) Returns: Employers must submit PAYE returns to the Federal Inland Revenue Service (FIRS) by the 10th of every month. These returns detail the income tax withheld from employees' salaries.
• Withholding Tax Report & VAT Report: Additionally, companies must submit reports on any withholding taxes and Value Added Tax (VAT) collected by the 21st of each month.