HR and payroll glossary
Plain definitions of the HR, payroll and tax terms used in Nigerian workplaces, with the law they come from.
C
- Consolidated Relief Allowance (CRA)
- The Consolidated Relief Allowance (CRA) was the main personal relief under the Personal Income Tax Act until 31 December 2025. It was the higher of ₦200,000 or 1% of gross…
G
- Gratuity
- Gratuity is a lump sum some employers pay when employment ends after a qualifying period of service. For private employers, no statute we found requires it: where it is paid,…
- Gross pay
- Gross pay is an employee's total earnings for a pay period before any deductions. It includes basic salary, housing, transport and every other allowance, plus overtime, bonuses or arrears paid…
I
- ITF contribution
- The ITF contribution is the annual levy employers pay to the Industrial Training Fund under the ITF Act as amended in 2011. It is 1% of total annual payroll for…
N
- National Housing Fund (NHF)
- The National Housing Fund (NHF) is a contributory housing scheme set up by the NHF Act. Nigerian workers earning ₦3,000 or more a year contribute 2.5% of their basic monthly…
- Net pay
- Net pay, or take-home pay, is what an employee receives after deductions: PAYE, the employee's pension contribution, NHF where it applies, and any agreed deductions such as loan repayments.
- NSITF
- The Nigeria Social Insurance Trust Fund (NSITF) runs the Employees' Compensation Scheme under the Employees' Compensation Act 2010. The scheme compensates employees for injuries, diseases and deaths arising out of…
P
- PAYE
- Pay As You Earn (PAYE) is the system under which an employer deducts personal income tax from employees' pay every month and pays it to the tax authority of the…
- Payslip
- A payslip is the statement an employer gives an employee for each pay period showing earnings, deductions and net pay. It lets the employee check that they were paid correctly.
- Pension Fund Administrator (PFA)
- A Pension Fund Administrator (PFA) is a company licensed by the National Pension Commission (PenCom) to manage Retirement Savings Accounts and invest pension contributions. PenCom's dashboard listed 20 licensed PFAs…
Q
- Query letter
- A query letter is a formal written request asking an employee to explain an alleged breach of rules or misconduct, usually within a set time. In Nigerian workplaces it is…
R
- Rent relief
- Rent relief is a deduction under the Nigeria Tax Act 2025 that lowers taxable income for individuals who pay rent. It is 20% of the annual rent paid, capped at…
- Retirement Savings Account (RSA)
- A Retirement Savings Account (RSA) is the personal pension account each employee holds with a Pension Fund Administrator under the Contributory Pension Scheme. The employee's contribution of at least 8%…
S
- State Internal Revenue Service (SIRS)
- A State Internal Revenue Service (SIRS) is the tax authority of a Nigerian state. It collects PAYE from employees who are resident in that state, for example the Lagos State…
T
- Tax Identification Number (TIN)
- A Tax Identification Number (TIN) is the number that identifies a taxpayer to the tax authorities in Nigeria. Employers need their own number to register and remit PAYE, and each…
- Taxable income
- Taxable income is the amount PAYE rates are applied to. For an employee it is annual gross employment income minus allowable deductions and reliefs.