Date : 04-10-2015

Question :

What is the ruling of Sharia on the agreement which a company`s staff provident fund concluded with an agency that provides Hajj and Umrah services. The agreement stipulates that the company`s fund receives a commission in exchange for every staff member it sends to seek the services of that agency, provided that the company settles all the costs(of Hajj or Umrah) on his behalf. In terms of Sharia, is it valid to classify this transaction as Ja`aalah(conditional payment)?

The Answer :

Al perfect praise be to Allah, The Lord of The Worlds, and may His Peace and Blessings be upon our Prophet Muhammad and upon all of his family and companions.

The above agreement is permissible and it is what Muslim jurists call "Ja`aalah" or "Brokerage", and there is no harm that it is a percentage, not a definite amount since some of the Hanbalite scholars have permitted determining its amount as a percentage. Ibn Qodamah(May Allah bless him) said, "If he sent a piece of textile to a tailor to make a certain piece of garment in exchange for what remains from that piece, then it is permissible"{Al-Moghni}.

In order for the above transaction to be permissible, it is conditioned that the agency doesn`t calculate its commission on basis of the overall cost in order to avoid usury(Riba) since if it did, then the commission of the company`s fund is collected from the staff member, not the company.

Moreover, it is conditioned that the Ja`aalah contract between the fund and the company is separated from the Umrah agreement between the staff member and the company, in order to avoid usury. Therefore, it isn`t permissible for the company to settle the overall amount due on the staff member after having deducted the commission obtained by Ja`aalah.

This Ja`aalah doesn`t fit under the Sharia maxim, "Every loan that yields a benefit is usurious" in case the company makes an instant payment on behalf of the staff member, then deducts it from his salary at a certain percentage. This is because the commission earned by the company wasn`t for providing the loan-the company`s loan to the staff member; rather, for conducting the transaction of Ja`aaalah, whether he made an instant payment or the company did so on his behalf. And Allah knows best.