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What is the meaning of available surplus and allocable surplus? What is the connection between allocable surplus and bonus?

Bonus payable under the Act is linked with profits. The employer has to calculate \"gross profits\" of his establishment in the manner specified in section 4.Then, from \"gross profits\" so calculated he has to deduct the sums referred to in section 6 as prior charges. The balance is called \"available surplus\". A percentage of the available surplus calculated in accordance with the provisions of sub-section (4) of section 2 is called \"allocable surplus.\"

Where, in respect of any year the allocable surplus exceeds the amount of minimum bonus payable to the employees, the employer must pay to every employee in respect of that year bonus in proportion to the salary or wage earned by the employee during the year subject to a maximum of twenty per cent of such salary or wage.


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