When workers take time off work for their annual leave, they often get paid a leave bonus. In Nigeria, many workers receive this extra money along with their salary when they go on leave. But how is this bonus calculated?
In this blog post, we will explain everything you need to know on How to Calculate Leave Bonus in Nigeria .
Now, let’s start by understanding what a leave bonus really means.
What is a Leave Bonus?
A leave bonus is extra money that a worker gets when they take their annual leave from work. It is not the same as their salary. It is given in addition to their salary as a reward or benefit.
This means that if a worker takes a break from work for their yearly leave, they still get paid their salary. But on top of that, they may also receive a leave bonus, which is like an extra payment.
Why Do Workers Get a Leave Bonus?
There are different reasons why employers pay a leave bonus. Some of the main reasons include:
1. To encourage workers to rest – Employers want workers to take a break and come back refreshed. The leave bonus makes the time off more enjoyable.
2. To reward workers for their service – It is a way of saying “thank you” to employees who have worked for a full year.
3. To follow company policy or agreement – Some companies have a policy that requires them to pay a leave bonus. Others may have it in the worker’s employment contract.
4. To follow labor laws – Even though not all companies must pay a leave bonus, some labor laws and agreements may require it.
Now that we know why workers receive a leave bonus, let’s look at how it is calculated.
How to Calculate a Leave Bonus in Nigeria
Different companies may have different ways of calculating a leave bonus. However, the most common way is by using a worker’s salary.
Here is a step-by-step guide on how to calculate a leave bonus.
Step 1: Know the Worker’s Basic Salary
The first thing to do is to check the worker’s basic salary. This is the amount of money they earn before any extra allowances, benefits, or deductions are added.
For example, if a worker earns ₦120,000 per month, this is their basic salary.
Step 2: Check the Percentage Used for Leave Bonus
Most companies in Nigeria use a percentage of the worker’s salary to calculate the leave bonus. The common percentage used is 10 percent. However, some companies may use 15 percent, 20 percent, or even more.
The percentage used depends on company policy, the worker’s contract, or industry agreements.
Step 3: Multiply the Basic Salary by the Leave Bonus Percentage
Once we know the percentage, we multiply it by the worker’s salary.
For example, if a worker earns ₦120,000 per month and the leave bonus is 10 percent, the calculation will be:
₦120,000 × 10/100 = ₦12,000
This means the worker will receive ₦12,000 as a leave bonus in addition to their salary.
Step 4: Add the Leave Bonus to the Worker’s Salary
Now, we add the leave bonus to the worker’s salary to see the total amount they will receive during their leave period.
Using our example:
Basic Salary = ₦120,000
Leave Bonus = ₦12,000
Total Pay = ₦120,000 + ₦12,000 = ₦132,000
This means the worker will receive ₦132,000 when going on leave.
Examples of Leave Bonus Calculation
Let’s look at some more examples with different salary amounts and percentages.
A Worker Earns ₦80,000 Per Month
Basic Salary: ₦80,000
Leave Bonus Percentage: 10 percent
Leave Bonus Calculation: ₦80,000 × 10/100 = ₦8,000
Total Pay During Leave: ₦80,000 + ₦8,000 = ₦88,000
What the Law Says About Leave Bonuses in Nigeria
The Nigerian Labor Act requires employers to give workers paid leave after working for 12 months. However, the law does not make it compulsory for employers to pay a leave bonus.
This means that while workers must receive their full salary during leave, the extra leave bonus is up to the employer. Some employers pay it because of company policy, industry practice, or agreements with employees.
How Companies Handle Leave Bonuses Differently
Different companies handle leave bonuses in different ways. Here are some common practices:
1. Some companies pay a fixed percentage – These companies use a set percentage of the worker’s salary, such as 10 percent or 15 percent.
2. Some companies pay a full extra salary – Instead of a percentage, some companies give workers an extra full month’s salary as a leave bonus.
3. Some companies do not pay a leave bonus – Since the law does not make it compulsory, some employers do not pay it at all.
4. Some companies pay based on years of service – Some companies increase the leave bonus as workers stay longer in the company.
What to Do If Your Employer Does Not Pay a Leave Bonus
If your employer does not pay a leave bonus, here are some things you can do:
1. Check your contract – Read your employment contract to see if it mentions a leave bonus.
2. Ask your HR department – If you are unsure, ask the human resources (HR) team in your company.
3. Discuss with your employer – If your company has been paying a leave bonus but suddenly stops, you can politely ask your employer about it.
4. Check labor union agreements – If you are part of a labor union, find out if the union has any agreement with the company about leave bonuses.
5. Look for another job – If you feel that your employer is not treating you fairly, you may consider looking for a company that offers better benefits.
Important Things to Know About Leave Bonuses in Nigeria
• Not all employers pay leave bonuses, so always check company policy before assuming you will get one.
• Some companies pay the leave bonus at the end of the leave period instead of at the beginning.
• Leave bonuses are usually taxed just like salaries, so the amount you receive may be slightly lower than the calculation.
• Government workers in Nigeria may receive a leave transport allowance instead of a leave bonus.
Conclusion
A leave bonus is extra money given to workers when they take their annual leave. It is usually a percentage of their salary, and it is meant to encourage rest and reward employees for their service.
To calculate a leave bonus, you multiply the worker’s salary by the percentage used by the employer. The total amount the worker receives will be their salary plus the leave bonus.
Although the Nigerian Labor Act does not make leave bonuses compulsory, many companies still pay them as part of their employee benefits.
If you work in Nigeria, it is important to know your company’s policy on leave bonuses so that you can plan your finances better.
