What is the ruling on the savings system, or what is called insurance, that companies operate?
Machine translationRead the Arabic original
The questioner : I work for a company that has a system called the savings system. An employee can leave a portion of his salary with the company, and after one year, the company adds ten percent to it. For every year of service, this percentage is added, so that after ten years of service, the company adds one hundred percent to what the employee has saved. The company’s intention in this is to encourage employees to save and to stay with the company. Please note that the company uses the money saved with it.
The Shaykh : This contract is invalid and not permissible because it is explicit riba (usury or interest). The employee gives the company, for example, one hundred riyals, and after one year, it gives him one hundred and ten. This is riba. The company claims that it does this to encourage staying with the company or to encourage employees to remain in their jobs. This claim is unnecessary; it is enough to say to anyone who excels in his work, “You have a reward of such and such,” and leave people on their salaries, with each person doing as he wishes with his salary.
Yes, if the company collects the money and says, “I will trade with this money in a permissible trade,” and then distributes the profit among you according to what the company agrees with these workers—whether it is half the profit, a third, or a quarter, according to their agreement—and if there is a loss, the loss is on the capital, not on the company. This is because some people take money from others to trade with it and say, “There is no loss on you; the loss is on me or on the worker, and the profit is between us.” This is a forbidden contract because the loss must be on the capital.
In summary, the insurance mentioned by this questioner is a forbidden contract, and it is not permissible for a person to enter into it. Allah the Exalted provides for him from where he does not expect. What?
The student: ... .
The Shaykh : Yes, this says that “al-samum” is the plural of “sam,” and it means the thing that has poison, namely the scorpion and the snake, and the like. In any case, the hadith is not authentic. Killing the snake and the scorpion, and killing every harmful creature, is among the matters of the Shari'ah. The Prophet (peace and blessings be upon him) said:Sunan an-Nasa'i 2881Sahih (Darussalam). So every harmful creature, even in the middle of the Haram, is to be killed. Yes.
The Shaykh : This contract is invalid and not permissible because it is explicit riba (usury or interest). The employee gives the company, for example, one hundred riyals, and after one year, it gives him one hundred and ten. This is riba. The company claims that it does this to encourage staying with the company or to encourage employees to remain in their jobs. This claim is unnecessary; it is enough to say to anyone who excels in his work, “You have a reward of such and such,” and leave people on their salaries, with each person doing as he wishes with his salary.
Yes, if the company collects the money and says, “I will trade with this money in a permissible trade,” and then distributes the profit among you according to what the company agrees with these workers—whether it is half the profit, a third, or a quarter, according to their agreement—and if there is a loss, the loss is on the capital, not on the company. This is because some people take money from others to trade with it and say, “There is no loss on you; the loss is on me or on the worker, and the profit is between us.” This is a forbidden contract because the loss must be on the capital.
In summary, the insurance mentioned by this questioner is a forbidden contract, and it is not permissible for a person to enter into it. Allah the Exalted provides for him from where he does not expect. What?
The student: ... .
The Shaykh : Yes, this says that “al-samum” is the plural of “sam,” and it means the thing that has poison, namely the scorpion and the snake, and the like. In any case, the hadith is not authentic. Killing the snake and the scorpion, and killing every harmful creature, is among the matters of the Shari'ah. The Prophet (peace and blessings be upon him) said: