🇳🇬 Labour Act Cap L1 & Finance Act 2020/2023
Nigeria Gratuity & Severance Pay Calculator
Calculate exit packages, redundancy severance, statutory notice pay, unused leave encashment, and capital gains tax (CGT) exemption thresholds.
💼 Employment & Separation Parameters
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Many corporate gratuity formulas calculate multipliers strictly on Basic pay.
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Under Section 11 Labour Act, 5+ years service entitles to at least 1 month notice.
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💰 Final Terminal Settlement
Net Take-Home Severance Package
₦0
Total Gross Entitlement: ₦0
Gratuity / Severance Base Amount ₦0
Applicable Formula Multiplier 1.5 months / yr
Payment in Lieu of Notice ₦0
Unused Annual Leave Monetization ₦0
Total Gross Terminal Benefits ₦0
Tax-Free Compensation Exemption ₦10,000,000 Exempt
Capital Gains Tax (10% on excess over ₦10M) -₦0
📜 Legal Framework for Redundancy & Gratuity in Nigeria
Terminal benefits under Nigerian law and market practice adhere to these core statutory rules:
- Redundancy (Section 20 Labour Act): When an employer reduces staff due to excess manpower, they must negotiate redundancy allowances according to collective agreements and the principle of "last in, first out".
- Notice Periods (Section 11 Labour Act): Minimum statutory notice periods are 1 day (under 3 months service), 1 week (up to 1 year), 2 weeks (up to 5 years), and 1 month (5 or more years). Pay in lieu is calculated on full monthly earnings.
- Capital Gains Tax (CGT) Exemption: Finance Act 2020 amended the CGT Act to provide that terminal compensation for loss of office up to ₦10,000,000 is completely tax-exempt. Any portion exceeding ₦10M is subject to 10% Capital Gains Tax.
📊 Statutory Breakdown Matrix
| Statutory Component | Amount / Metric |
|---|---|
| Total Gross Severance Package | -- |
| Statutory Tax-Exempt Severance Allowance | -- |
| Capital Gains Tax Liability (CGT 10%) | -- |
| Net Severance Payout to Bank | -- |
MS
Engr. Muhammad Shahzad
Principal Financial Systems Architect & Statutory Compliance Specialist
Lead software and systems architect specializing in high-performance browser computing, algorithmic validation, financial models, and zero-telemetry client-side privacy architecture.