Section 36: Set on and set off of allocable surplus
Carries forward excess allocable surplus or deficiency through the statutory set-on/set-off mechanism and period.
Statutory identity
What the provision requires
Carries forward excess allocable surplus or deficiency through the statutory set-on/set-off mechanism and period.
Implementation control: Maintain an establishment-wise year ledger and use the prescribed appendices for the rolling balance.
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.
Set-on
Excess allocable surplus above the maximum bonus is carried forward within the statutory limit.
Set-off
Deficiency needed to meet minimum bonus is carried forward on the statutory basis.
Rolling period
Use the prescribed multi-year ledger and ordering.
Appendix
Central Rules 22, 23, 27 and 28 and appendices support the computation.
Linked Code on Wages (Central) Rules, 2026
Manner of carrying forward when allocable surplus exceeds maximum bonus payable
Exact rule text, paragraph map, forms and compliance controls.
Central Rule 28Manner of carrying forward when there is no allocable surplus for payment of minimum
Exact rule text, paragraph map, forms and compliance controls.
Authority, form and filing map
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
Incorrect eligibility, computation or timing may create bonus arrears, claims, recovery and penalty exposure.
Remedy path: identify the claims authority, appellate authority, adjudicating officer, Inspector-cum-Facilitator or criminal court applicable to the issue.
Worked example
A high-surplus year creates set-on, followed by a deficit year. The rolling statutory ledger determines how much surplus is carried and used; it cannot be recreated from memory.
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 36 text ↗
India Code — official consolidated Act PDF ↗
Ministry of Labour — Codes, Rules, notifications and FAQs ↗
Last official-source review: 16 July 2026.