(1) The bonus shall be paid out of the allocable surplus which shall be an amount equal to sixty per cent in case of banking company and sixty-seven per cent in other cases of the available surplus.
(2) Where in any accounting year, the allocable surplus exceeds the amount of minimum bonus payable to the employees, the employer shall, in lieu of such minimum bonus, be bound to pay to every employee in respect of that accounting year bonus an amount in proportion to the wages earned by the employee during that accounting year, subject to a maximum of twenty per cent of such wages.
Legal Commentary & Landmark Judgments: Section 29
Section 29 governs the disbursement of bonus out of allocable surplus, mandating that the bonus payable to eligible employees shall be paid out of the allocable surplus computed in accordance with the Code, subject to the statutory minimum of 8.33% and maximum of 20% of wages earned during the accounting year.
In conciliation and tribunal proceedings, employers must present certified Form A and B bonus computation registers showing the exact calculation of allocable surplus. If the allocable surplus yields an entitlement between 8.33% and 20%, the employer is legally obligated to disburse that higher percentage; arbitrarily capping bonus at 8.33% while retaining allocable surplus violates Section 29 and attracts recovery under Section 45.