Statutory deductions are the amounts an employer must take out of salaries, or pay on top of them, because the law says so, chiefly PAYE income tax and pension contributions in Nigeria.
They split into two groups that are often confused:
Deducted from the employee's salary:
- PAYE, income tax under the Nigeria Tax Act 2025 bands, remitted to the state tax authority by the 10th of the next month
- Pension (8%), of basic + housing + transport, mandatory for employers with 3+ employees
- NHF (2.5% of basic), only if the employee opted in; it's voluntary for private-sector workers
Paid by the employer on top of salary (never deducted):
- Pension (minimum 10%), the employer's own contribution to each RSA
- NSITF (1% of monthly payroll), workplace injury insurance
- ITF (1% of annual payroll), training levy, for employers with 5+ staff or ₦50m+ turnover
Nigerian example: for an employee on ₦300,000/month, the employer deducts about ₦28,580 PAYE (with rent relief applied) and ₦24,000 pension from the salary, then separately pays ₦30,000 employer pension and its NSITF levy from company funds.
Getting the two groups mixed up, deducting employer costs from workers, or treating voluntary NHF as compulsory, is the most common payroll error in small Nigerian businesses.
The full guide with deadlines and penalties is statutory deductions in Nigeria; check any salary on the free calculator.