There is a system in some companies called the savings system, which is optional and not mandatory, and its form is that the company deducts a percentage of the employee's salary.
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The questioner : A question that your brother Ali asked you on the phone, but with some clarification, because a large number of employees in the company where I work are waiting for the answer.
The student : Do you remember, Shaykh, a few days ago I asked you about the company that has the savings system?
The questioner : The savings system.
The student : The savings system, in the morning.
Another student: We want the question now.
The student : He will mention it now.
The questioner : The question.
The student : Because people there are waiting for your answer, our Shaykh.
The questioner : I think the question is very important for a large number of employees and the listening brothers, and this system is used by many companies, especially in the Gulf countries, even in this country. I work in an oil company.
The Shaykh : Oil.
The questioner : Yes, so the company has several benefits or several systems that provide the employee with free medical treatment, provide the employee with furnished housing, and so on with these privileges. So the company decided to establish a savings and investment system, which it named this, for its employees. The system... is on two systems: an investment system based on interest-based systems directly linked to banks, and this is not the point of dispute.
The Shaykh : Good.
The questioner : The ruling is clear.
The Shaykh : Good.
The questioner : As for the second system, it is a savings and preservation system based on the employee's desire; if he wants to participate or not, he has the choice. It is based on deducting a percentage of his monthly salary, from one to ten percent.
The Shaykh : From one?
The questioner : To ten percent of his salary, which the company deducts and keeps in the company's capital, meaning it does not give it to him when he wants to participate, when he desires, and saves it for the employee. So every employee has an account in the accounting showing how much he has saved each month. And here there are two forms of benefiting from these amounts.
The Shaykh : Excuse me, we are done with this form, the one before the second.
The questioner : We are in the second form, which is the form of savings. Now, the first form, which is the investment linked to banks, is not the subject of the inquiry, so its ruling is clear. The question is about the second form, the savings system that deducts ten percent from the employee's salary.
The Shaykh : Which is from one to ten.
The questioner : Let's say ten percent, and it is accumulated for him. Now, for the benefit, the employee benefits from these saved funds; no participating employee is allowed to benefit from his savings except when his service ends, whether by resignation or dismissal. This is one form. The second form allows him to withdraw part of his savings, only fifty percent, at any time he wishes while he is still in his job, without resignation or dismissal. And here is a note related to this savings: the employee, whether he withdraws from his savings while... in his job, or resigns, or is dismissed, the company gives him - it calls it a bonus - an increase on the amount of his savings. Let's suppose a person, and this bonus is not linked to the years of his participation in the system, because he may have ten years of experience in the company, but the withdrawal is after five years of his employment.
The Shaykh : Excuse me, repeat, what is it not?
The questioner : It is not linked to the number of years of his participation in the savings system, but it is linked to the number of years of his experience in the company.
The Shaykh : Ah
The questioner : Let's suppose, of course, this bonus is graduated. One year of experience in the company, he takes his savings plus five percent, the company gives him a bonus from that. Five years, for example, after five years of experience in the company, he takes the amount he saved plus fifty percent of... his savings. After fourteen years of his experience in the company, if he resigns or is dismissed, he takes one hundred percent relative to his savings. Let's suppose a person was employed this year and participated from the beginning of his employment, so after fourteen years he saved one hundred thousand, he takes another one hundred thousand. Another person was employed with him in the same... but participated in the last year, the fourteenth year, and saved one thousand, he takes one thousand. Both take the same percentage, one hundred percent. Therefore, it is not linked to the years of participation in the system, but it is linked to the years of his experience in the company. Also, if a year passes for him, we said this. Now, the question is: what is the ruling on participating in this system? And the second question is: what is the ruling?
The Shaykh : Before the second question, let's stay with the first. Okay, this that is given to this employee has no relation to the money saved for him, which the company employed and benefited from.
The questioner : The system is established with specific percentages according to his years of experience.
The Shaykh : I hope you do not repeat it to me, but I hope the answer will be clear after understanding the question. This man who has been an employee for twenty years and had one to ten percent saved for him, as I said, the one who had one percent saved for him will be rewarded with less than the one who had ten percent saved for him.
The questioner : Yes.
The Shaykh : Okay, where does the company take this bonus from?
The questioner : From its capital.
The Shaykh : From its capital?
The questioner : Yes.
The Shaykh : Okay, what did the company do with these savings from Zayd, Bakr, and 'Amr? Did it put them in a trust fund, or did it employ them and trade with them in one way or another? Of course, this money was not put in a trust fund.
The student : This is settled.
The Shaykh : So.
The student : Because the company... is in Japan.
The Shaykh : So, the employees' savings, according to the number of employees, whether many or few, will be a very large amount of money with the company, or a large amount, not very large. And this money, as far as I can see, they will add it to their capital. And we know, as we said earlier regarding the paper our brother asked about earlier, that this paper has a relation to banks. So if there is an Islamic bank, a name that fits its description, then we look to see if there is anything that contradicts the Shari'ah or not? Now, companies in general, I think, cannot do any commercial work unless they are linked to a bank or international banks, and they do not distinguish, of course, between an Islamic bank or a British bank in terms of dealing, meaning.
The questioner : This is if the Islamic one is truly Islamic.
The Shaykh : Yes.
The questioner : This is even if the Islamic one is truly Islamic.
The Shaykh : Yes, this is settled.
The questioner : Yes.
The Shaykh : So, the point is, I say that this money that is saved, first, it is assistance in consuming interest. And we mention on this occasion his saying (peace and blessings be upon him):Al-Mustadrak lil-Hakim 15:4 We now want to say that these employees are made to consume the interest of others, but I am afraid in the end that they themselves are consuming the interest. So, it is very clear in my mind that they are made to consume the interest like the company, because when the company puts the money in the bank, it and companies like it are the ones on whose shoulders the banks are established. If they withdrew their capital, the banks would go bankrupt, right?
The questioner : Yes.
The Shaykh : Okay, so the company and those who cooperate with it are made to consume the interest. Now, we return: do these employees who save in the company, when they deduct from their salary by their choice, do they not consume the interest? Here is a question.
The questioner : This varies from person to person...
The Shaykh : No, we say, as I said, the participants are one percent, one, two, like that, up to ten. We are talking about these people.
The questioner : ... the employee saves, meaning when he leaves the company after so many years, he finds the amount saved for him, so it helps him. Meaning, the employee's goal is to find a saved amount for him at the end of his service. So the company comes and says this is an increase percentage for you. This is just a clarification, meaning not more.
The Shaykh : What was the clarification that came before this? I think this clarification was already given, but let us add more clarification. Let us assume that a person who has been employed for twenty years has a total savings of ten thousand. If he takes this ten thousand as it is, the issue of the violation is that he helped the company to deal with his ten thousand. Here, what I mentioned earlier applies. But the question that I have not yet taken clearly—perhaps it is unclear, or perhaps it is clear but I did not understand it—is whether he takes only the ten thousand, or does he take an increase on top of it?
The questioner : He takes ten thousand and an increase on top of it.
The Shaykh : This is my question.
The questioner : The increase is based on his years of experience.
The Shaykh : Is this increase not a case of him eating riba (usury or interest)? Where did this increase come from?
The questioner : The company calls it a bonus from them to her.
The Shaykh : ... They call riba (usury or interest) a sale.[Al-Baqarah 2:275] It is not our concern what they call it. We are now setting this aspect aside, because the reality today is that the Islamic world is invaded by transactions that come to us from the lands of disbelief. These transactions come to us from the lands of disbelief, which Allah (Mighty and Majestic) described with two distinct attributes, but they
The student : Do you remember, Shaykh, a few days ago I asked you about the company that has the savings system?
The questioner : The savings system.
The student : The savings system, in the morning.
Another student: We want the question now.
The student : He will mention it now.
The questioner : The question.
The student : Because people there are waiting for your answer, our Shaykh.
The questioner : I think the question is very important for a large number of employees and the listening brothers, and this system is used by many companies, especially in the Gulf countries, even in this country. I work in an oil company.
The Shaykh : Oil.
The questioner : Yes, so the company has several benefits or several systems that provide the employee with free medical treatment, provide the employee with furnished housing, and so on with these privileges. So the company decided to establish a savings and investment system, which it named this, for its employees. The system... is on two systems: an investment system based on interest-based systems directly linked to banks, and this is not the point of dispute.
The Shaykh : Good.
The questioner : The ruling is clear.
The Shaykh : Good.
The questioner : As for the second system, it is a savings and preservation system based on the employee's desire; if he wants to participate or not, he has the choice. It is based on deducting a percentage of his monthly salary, from one to ten percent.
The Shaykh : From one?
The questioner : To ten percent of his salary, which the company deducts and keeps in the company's capital, meaning it does not give it to him when he wants to participate, when he desires, and saves it for the employee. So every employee has an account in the accounting showing how much he has saved each month. And here there are two forms of benefiting from these amounts.
The Shaykh : Excuse me, we are done with this form, the one before the second.
The questioner : We are in the second form, which is the form of savings. Now, the first form, which is the investment linked to banks, is not the subject of the inquiry, so its ruling is clear. The question is about the second form, the savings system that deducts ten percent from the employee's salary.
The Shaykh : Which is from one to ten.
The questioner : Let's say ten percent, and it is accumulated for him. Now, for the benefit, the employee benefits from these saved funds; no participating employee is allowed to benefit from his savings except when his service ends, whether by resignation or dismissal. This is one form. The second form allows him to withdraw part of his savings, only fifty percent, at any time he wishes while he is still in his job, without resignation or dismissal. And here is a note related to this savings: the employee, whether he withdraws from his savings while... in his job, or resigns, or is dismissed, the company gives him - it calls it a bonus - an increase on the amount of his savings. Let's suppose a person, and this bonus is not linked to the years of his participation in the system, because he may have ten years of experience in the company, but the withdrawal is after five years of his employment.
The Shaykh : Excuse me, repeat, what is it not?
The questioner : It is not linked to the number of years of his participation in the savings system, but it is linked to the number of years of his experience in the company.
The Shaykh : Ah
The questioner : Let's suppose, of course, this bonus is graduated. One year of experience in the company, he takes his savings plus five percent, the company gives him a bonus from that. Five years, for example, after five years of experience in the company, he takes the amount he saved plus fifty percent of... his savings. After fourteen years of his experience in the company, if he resigns or is dismissed, he takes one hundred percent relative to his savings. Let's suppose a person was employed this year and participated from the beginning of his employment, so after fourteen years he saved one hundred thousand, he takes another one hundred thousand. Another person was employed with him in the same... but participated in the last year, the fourteenth year, and saved one thousand, he takes one thousand. Both take the same percentage, one hundred percent. Therefore, it is not linked to the years of participation in the system, but it is linked to the years of his experience in the company. Also, if a year passes for him, we said this. Now, the question is: what is the ruling on participating in this system? And the second question is: what is the ruling?
The Shaykh : Before the second question, let's stay with the first. Okay, this that is given to this employee has no relation to the money saved for him, which the company employed and benefited from.
The questioner : The system is established with specific percentages according to his years of experience.
The Shaykh : I hope you do not repeat it to me, but I hope the answer will be clear after understanding the question. This man who has been an employee for twenty years and had one to ten percent saved for him, as I said, the one who had one percent saved for him will be rewarded with less than the one who had ten percent saved for him.
The questioner : Yes.
The Shaykh : Okay, where does the company take this bonus from?
The questioner : From its capital.
The Shaykh : From its capital?
The questioner : Yes.
The Shaykh : Okay, what did the company do with these savings from Zayd, Bakr, and 'Amr? Did it put them in a trust fund, or did it employ them and trade with them in one way or another? Of course, this money was not put in a trust fund.
The student : This is settled.
The Shaykh : So.
The student : Because the company... is in Japan.
The Shaykh : So, the employees' savings, according to the number of employees, whether many or few, will be a very large amount of money with the company, or a large amount, not very large. And this money, as far as I can see, they will add it to their capital. And we know, as we said earlier regarding the paper our brother asked about earlier, that this paper has a relation to banks. So if there is an Islamic bank, a name that fits its description, then we look to see if there is anything that contradicts the Shari'ah or not? Now, companies in general, I think, cannot do any commercial work unless they are linked to a bank or international banks, and they do not distinguish, of course, between an Islamic bank or a British bank in terms of dealing, meaning.
The questioner : This is if the Islamic one is truly Islamic.
The Shaykh : Yes.
The questioner : This is even if the Islamic one is truly Islamic.
The Shaykh : Yes, this is settled.
The questioner : Yes.
The Shaykh : So, the point is, I say that this money that is saved, first, it is assistance in consuming interest. And we mention on this occasion his saying (peace and blessings be upon him):
May Allah curse the one who eats riba and the one who feeds it.
لعن الله آكل الربا وموكلهThe questioner : Yes.
The Shaykh : Okay, so the company and those who cooperate with it are made to consume the interest. Now, we return: do these employees who save in the company, when they deduct from their salary by their choice, do they not consume the interest? Here is a question.
The questioner : This varies from person to person...
The Shaykh : No, we say, as I said, the participants are one percent, one, two, like that, up to ten. We are talking about these people.
The questioner : ... the employee saves, meaning when he leaves the company after so many years, he finds the amount saved for him, so it helps him. Meaning, the employee's goal is to find a saved amount for him at the end of his service. So the company comes and says this is an increase percentage for you. This is just a clarification, meaning not more.
The Shaykh : What was the clarification that came before this? I think this clarification was already given, but let us add more clarification. Let us assume that a person who has been employed for twenty years has a total savings of ten thousand. If he takes this ten thousand as it is, the issue of the violation is that he helped the company to deal with his ten thousand. Here, what I mentioned earlier applies. But the question that I have not yet taken clearly—perhaps it is unclear, or perhaps it is clear but I did not understand it—is whether he takes only the ten thousand, or does he take an increase on top of it?
The questioner : He takes ten thousand and an increase on top of it.
The Shaykh : This is my question.
The questioner : The increase is based on his years of experience.
The Shaykh : Is this increase not a case of him eating riba (usury or interest)? Where did this increase come from?
The questioner : The company calls it a bonus from them to her.
The Shaykh : ... They call riba (usury or interest) a sale.
But Allah has permitted trade and has forbidden interest
وأحل الله البيع وحرم الربا
Source
www.al-albany.com
The Arabic text is copied verbatim from the original source, without any edits.