A lot sits behind the monthly salary payment.
For an employer, payroll can involve more than calculating salaries and preparing payslips. Depending on the business and the employees concerned, there may also be pension, PAYE, NSITF and ITF obligations to handle.
And they do different jobs.
PENCOM → Pension
The National Pension Commission (PenCom) regulates Nigeria’s contributory pension system, under which covered employers and employees make pension contributions toward retirement savings.
NSITF → Employee Compensation
The Nigeria Social Insurance Trust Fund (NSITF) administers the Employees’ Compensation Scheme, which provides compensation for work-related injuries, occupational diseases, disability and related employment situations.
ITF → Employee Training
The Industrial Training Fund (ITF) supports employee training and skills development. Certain employers are required to contribute 1% of annual payroll under the ITF Act.
PAYE → Employee Income Tax
PAYE (Pay As You Earn) is the system through which tax on employment income is deducted from employees’ pay and remitted to the relevant tax authority by the employer.
So, what does this mean?
Paying salaries is only one part of payroll.
A payroll process should also account for the tax, pension and other statutory obligations that apply to the business.
Before you say “Payroll is sorted,” ask:
Salary paid? ✓
Payslip prepared? ✓
Applicable statutory obligations handled? ✓
Because payroll is not just about what your employee receives.
It is also about what the employer is required to do around that payment.
