Halal salary: understanding what makes income lawful

A role may seem acceptable while still leaving a nagging worry: is the money I receive really lawful? The question comes up when the employer has varied sources of income, when the contract includes bonuses or an employee savings scheme, or when you have spent time working in a debated sector. This page presents the principles scholars most often draw on to answer it.

It does not settle any individual case. Positions vary between schools of law and contemporary scholars; for your own situation, a qualified scholar remains the right person to ask.

What makes a salary lawful

From the perspective of Islamic law, a salary is the consideration for work provided under a contract for services (ijara). It is generally considered lawful if three conditions are met:

1. the work itself is permitted: the task does not consist of producing, selling or directly facilitating something forbidden;
2. the contract is clear: the duties, the duration and the pay are known, with no deception on either side;
3. the work is actually done: the employee fulfils their obligations conscientiously and honestly.

In other words, it is first and foremost the nature of your own work that determines whether your salary is lawful. To assess this first point, the guide that helps you decide whether a role is lawful offers a set of questions.

When the employer has mixed income

Almost all large companies have interest-bearing bank accounts, interest-based borrowing or clients with diverse activities. Many contemporary scholars hold that this does not make the salary unlawful when:

• the company's main activity is lawful;
• the employee is not personally assigned to the unlawful part;
• the salary pays for permitted work.

The reasoning is that the employee receives the consideration for their own effort, not a direct share of the employer's forbidden income. Other, stricter scholars recommend favouring employers whose unlawful income is marginal. The accounting side of these situations is developed in the guide on accounting for mixed income.

Purifying income

Some scholars advise purification (tathir) of part of one's income when a portion clearly comes from an unlawful source. The principle generally set out is as follows:

• identify, as far as possible, the share of income linked to what is forbidden, for example interest received;
• give it away to causes of general benefit, without expecting spiritual reward or personal advantage;
• do not count it as obligatory almsgiving (zakat).

Purification is mainly discussed for investments and savings. For a salary earned in a job now considered problematic, opinions differ on what to do with sums already received; many scholars stress above all repentance and seeking lawful work for the future.

Bonuses and benefits

Performance bonuses, a thirteenth-month payment, long-service awards and benefits in kind follow, in principle, the rule for the salary: if they pay for permitted work, they are generally considered lawful. A few points deserve particular attention:

• a bonus linked to sales of a forbidden product takes on the nature of that product;
• a bonus won through a paid prize draw may resemble a game of chance;
• shopping vouchers or meal vouchers raise no particular difficulty if used for lawful products.

Employee savings, pensions and profit-sharing

In many countries, employers offer savings, profit-sharing or supplementary pension schemes. How they are viewed depends on how they work:

• compulsory contributions to pensions or social security are a legal obligation; many scholars consider that the employee does not bear responsibility for them and may receive the benefits;
• voluntary savings invested in interest-bearing funds or conventional bonds raise more questions. Where there is a choice, it is often advised to opt for a screened equity fund or a Sharia-compliant option, if the plan offers one. In the UK, for example, some workplace pension providers offer a Sharia-compliant fund among their investment choices;
• profit-sharing paid according to the company's results generally follows the assessment made of the employer's activity.

To understand compliant products better, the page on Islamic investment explains the screening principles used by fund managers.

Overtime, tips and additional income

Paid overtime and allowances provided for by law or by a collective agreement pay for work actually done, so they follow the general rule. Tips received in a restaurant or hotel are generally considered a gift from the customer; how they are viewed depends mainly on the nature of the service provided. Finally, additional income from self-employment should be examined in its own right, using the same criteria as the main job.

The employer's obligations

The Islamic work ethic also stresses the duties of the employer: paying a fair wage, agreed in advance and paid without delay. These principles echo those of modern employment law, which guarantees a minimum wage in many countries and protects employees when wages go unpaid. In the event of a dispute, contact the labour inspectorate or the competent courts or tribunals in your country.

In summary

• Your salary is judged first by the nature of your own work.
• According to many scholars, an employer's mixed income does not automatically make the salary unlawful.
• Purification mainly concerns income clearly identified as unlawful, such as interest.
• For workplace savings, choose compliant options where they exist.

To find out which activities are problematic in the first place, see also the list of roles considered forbidden.