Gratuity Calculator Nigeria — End of Service Benefits Calculator
Calculate end-of-service gratuity based on final salary, years of service, and company policy. Nigerian employment context with tax implications.
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Service years:
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Total Gratuity
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Annual Salary
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Gratuity Per Year of Service
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Tax Status (see FAQ)
Gratuity by Years of Service
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Policy Comparison
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Gratuity in Nigerian Workplaces
Gratuity is most commonly found in oil & gas companies, multinationals, banks, and government agencies. Typically, you must serve a minimum of 5 years to qualify, with some companies requiring 10 years.
Pro tip: Always negotiate gratuity terms when accepting a job offer, and get the policy in writing. Verbal promises are difficult to enforce. Review the policy every time you receive a promotion or salary increase, as gratuity is usually based on your final salary.
Frequently Asked Questions
What is gratuity in Nigeria?
Gratuity is a lump-sum payment made by an employer to an employee upon retirement, resignation, or termination after a qualifying period (usually 5+ years). It is a reward for long service. Unlike pension, gratuity is typically a one-time payment and the amount depends on company policy, years of service, and final salary.
Is gratuity mandatory in Nigeria?
There is no single federal law mandating gratuity for all private sector employees in Nigeria. However, some collective bargaining agreements, industry-specific regulations (e.g., oil & gas sector), and company policies provide for gratuity. Many Nigerian companies, especially multinationals, offer gratuity as part of their exit benefits. Always check your employment contract.
How is gratuity calculated in Nigeria?
Common formula: Gratuity = (Final Monthly Salary / 12 × Policy Rate% × Years of Service). For example, if the policy is 100% of annual salary per year: Gratuity = Annual Salary × Years. But many companies use 5–10% of annual salary per year. Check your company's specific policy.
Is gratuity taxable in Nigeria?
Under the Personal Income Tax Act (PITA), gratuity payments may be exempt from PAYE up to certain limits, particularly when paid as a lump sum upon genuine retirement. However, payments made as compensation or to employees who have not genuinely retired may be taxable. Consult a tax professional for your specific situation.
What is the difference between gratuity and pension in Nigeria?
Pension under the Contributory Pension Scheme (CPS) is a monthly fund built through mandatory 18% contributions (8% employee + 10% employer) managed by PFAs. Gratuity is a separate, typically one-time employer payment based on service years. Both can coexist. The oil & gas and public sectors in Nigeria often have both.