Section 31: Payment of bonus out of allocable surplus
Requires minimum bonus and, where allocable surplus supports it, additional bonus up to the statutory maximum; contains special rules for newer establishments.
Statutory identity
What the provision requires
Requires minimum bonus and, where allocable surplus supports it, additional bonus up to the statutory maximum; contains special rules for newer establishments.
Implementation control: Prepare a signed bonus computation from gross profit through available and allocable surplus, minimum liability and cap.
Provision-level reading sequence
- Read each subsection, clause, proviso and explanation in the official text.
- Apply section 2 definitions before testing the obligation or exception.
- Identify the appropriate Government and the applicable Central or State rule.
- Check commencement, section-specific notifications and saved predecessor-law instruments.
- Document the factual test and the evidence supporting the conclusion.
Provision map — subsection, clause and qualification
This map decomposes the section into its operative tests. Use the linked India Code text for exact numbering and wording.
Minimum liability
Pay the minimum statutory bonus to eligible employees subject to the Code.
Allocable-surplus step
Where allocable surplus exceeds the minimum requirement, calculate additional bonus.
Maximum cap
Bonus cannot exceed the statutory percentage cap.
New establishments
Apply the special early-accounting-year rules.
Contract workers
Read with section 43 and Central Rule 21 for payment responsibility.
Linked Code on Wages (Central) Rules, 2026
No direct section citation was detected in the text of the 2026 Central Rules. The section may still operate with another rule, notification or State rule; verify the rule-making clause and current official library.
Authority, form and filing map
Section-specific notification
Section 31(3): Bonus-related instrument — open official Ministry library ↗
Evidence pack
- audited financial statements
- employee eligibility and attendance data
- gross/available/allocable surplus workbook
- set-on/set-off ledger and payment proof
Compliance consequence
Underpayment or delayed payment can generate employee claims, compensation/recovery and offence exposure under the Code.
Remedy path: identify the claims authority, appellate authority, adjudicating officer, Inspector-cum-Facilitator or criminal court applicable to the issue.
Worked example
The allocable surplus is insufficient for the percentage expected by employees. The employer still tests the statutory minimum bonus and set-on/set-off ledger before finalising liability.
Illustrative only. Apply actual wage notifications, contracts, dates, State rules and evidence.
Practical Q&A
Can an employment contract override this section?
Not where the contract reduces a statutory entitlement. Sections 60 and 61 must be considered, including any more favourable award, agreement or contract.
What should be checked before payroll or HR action?
Confirm coverage, appropriate Government, operative rate/order, the exact subsection and proviso, linked rule, evidence, approval and payment/filing deadline.
Primary sources
India Code — exact Section 31 text ↗
India Code — official consolidated Act PDF ↗
Ministry of Labour — Codes, Rules, notifications and FAQs ↗
Last official-source review: 16 July 2026.