Salaries And Wages

QUESTION:

Regarding increases or decreases in annual salaries and wages, is the employee’s relationship with an employer similar to that of a seller and buyer? Meaning, does the employee “sell” labour to the employer? In the absence of an employment contract, do the salary/wage changes need to be negotiated (e.g. yearly) and agreed upon by the employer & employee for it to be valid according Shariah?

ANSWER:

According to Hanafi Fiqh, the relationship between an employer and an employee is classified as Ijaarah —a contract of hiring rather than a literal sale. More precisely, the employer acquires the employee’s lawful services/labour, for an agreed wage. Ijaarah is a transaction involving a known benefit in exchange for an agreeable compensation.

( هِيَ بَيْعُ مَنْفَعَةٍ مَعْلُومَةٍ بِأَجْرٍ مَعْلُومٍ ) … أَيْ الْإِجَارَةُ اسْمٌ لِلْأُجْرَةِ وَهِيَ مَا أُعْطِيَ مِنْ كِرَاءِ الْأَجِيرِ وَقَدْ أَجَرَهُ إذَا أَعْطَاهُ أُجْرَتَهُ وَالْأَجْرُ مَا يُسْتَحَقُّ عَلَى عَمَلِ الْخَيْرِ(تبيين الحقائق شرح كنز الدقائق وحاشية الشلبي 5/ 105

ALLAH TA’ALA ALONE IN HIS INFINITE KNOWLEDGE KNOWS BEST!

ANSWERED BY:

Mufti Ahmed Saeed

Date: 10 Rabi-ul-Awwal 1448 / 22 September 2026

CHECKED AND APPROVED BY:

Mufti Yacoob Vally Saheb