Statutory deductions

Nigerian law requires an employer to deduct some amounts from pay and to contribute others itself. Cadre calculates all of them in each payroll run, from the law and the rates in force for the month. You don’t enter them yourself.

Who can see statutory figures in payroll runs: Owner, Payroll admin, Payroll approver.

The five obligations

	What it is	Who bears it	What it’s worked out on
PAYE	Income tax on employment income, deducted from pay each month and paid to the state tax authority	The employee	Taxable pay and benefits in kind, less deductions and reliefs, on the tax year to date
Pension	Contributory pension under the Pension Reform Act 2014, paid to each employee’s retirement savings account with their pension fund administrator	The employee and the employer, each their own contribution	Basic salary, housing and transport
NHF	National Housing Fund contribution	The employee, only if they’ve opted in	Basic salary
NSITF	Employees’ compensation contribution to the Nigeria Social Insurance Trust Fund	The employer	The total monthly payroll
ITF	Industrial Training Fund contribution, charged once a year	The employer, once it meets the law’s threshold	The annual payroll

Each obligation is explained in PAYE and Pension, NHF, NSITF and ITF.

Obligations follow the legal employer

Statutory obligations belong to the legal employer, the organisation that employs the person. They never belong to the payroll operator, the organisation that runs the payroll. When an agency runs a client’s payroll, for example, PAYE and pension are the client’s, filed under the client’s registrations.

So in every run, Cadre:

• calculates under the law of the legal employer’s country;
• files every schedule under the legal employer’s registrations, such as its TIN, PAYE tax IDs and pension employer code;
• lists each remittance against the legal employer.

For agencies, who the legal employer is depends on the service model. For seconded workers the agency is the legal employer. See How agencies work.

Where the rates come from

Cadre maintains the statutory rates, bands, thresholds and reliefs in dated rate sets. Each run uses the rates that apply to its month. A locked run keeps the figures it was calculated with, even if the rates change later.

To see how any figure was worked out, open the person’s line in the run’s register. How it was calculated lists each step with its basis.

From payroll run to authority

1. Cadre calculates the deductions and contributions in the run.
2. When the run is locked, a payroll admin produces the statutory schedules: PAYE for each state, pension for each pension fund administrator, NHF and NSITF.
3. Each schedule becomes a remittance with its due date.
4. You pay the authority, then record the remittance in Cadre.

See Remittances.

Related

• How payroll works
• Set up pay
• Glossary