Tax guide
Employee vs Contractor in Nigeria: Cost and Take-Home Comparison
Compare PAYE employee path, engager cost, and WHT on the same monthly payment. Classification is fact-based.
Short answer: On the same monthly payment, an employee on PAYE and a contractor on WHT can have different take-home and different engager cost. Employment status depends on facts, not labels.
What the comparison shows
For one monthly payment amount:
- Employee path: PAYE, pension, NHF, net pay, and full engager cost including employer pension
- Contractor path: WHT, suggested business tax reserve, net after WHT, and engager cost
The difference row highlights who keeps more cash and what the engager spends.
Classification warning
Calling someone a "contractor" does not make them one for tax purposes. Control, integration, equipment, and risk matter. The calculator is educational only.
When founders use this
- Hiring first technical hire as employee vs consultant
- Re-structuring existing consultants
- Budgeting engager cost for project-based work
Run the comparison
Use Staff Pay Tax Calculator — contractor compare mode.
Sources reviewed
- Nigeria Tax Act 2025 — employment vs business income context
- Staff Pay Tax Calculator contractor compare notice (counsel-reviewed, September 2026)
Educational only. Not legal classification advice.
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