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The Question of Wages for a Partner

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Question: The Majlis has always held the view that it is not permissible to stipulate a salary for a partner in addition to his profit-share. A Mufti Saheb holds the opposite view, namely, that in addition to a working partner’s fixed profit-share, a salary may also be fixed for him. The Mufti Saheb has referred me to the fatwa which appears in Ahsanul Fataawa. According to this fatwa, the respected Mufti Rashid Saheb (rahmatullah alayh) is of the view that a salary for a working partner in addition to his profit-share is permissible. Please resolve this conflict.

The view of The Majlis is the official view of the Shariah while the contrary view is a personal opinion. The answer in Ahsanul Fataawa is erroneous. The honourable Hadhrat Mufti Rashid (rahmatullah alayh) has erred in his conclusion. Despite his erudite Knowledge of the Shariah and him being an outstanding Aalim of the Haqq, his arguments on this particular question are exceptionally weak. The error is compounded by the fact that in presenting his personal view, the honourable Mufti Rashid (rahmatullah alayh) has overridden the Consensus of the Fuqaha. In fact, he has abrogated a clear-cut ruling which all our Fuqaha have given from the very inception of Islam.

Undoubtedly, Hadhrat Mufti Rashid Saheb (rahmatullah alayh) was a very learned Mufti of superior rank and piety. Nevertheless, every good horse too slips occasionally. Great and illustrious Muftis too err. We have studied many of the erudite fataawa of Hadhrat Mufti Rashid Saheb (rahmatullah alayh). The one pertaining to wages for a partner is truly incompatible with the Knowledge of the honourable Mufti. The weakness and legless nature of this particular fatwa are so astounding that if we did not see it in Ahsanul Fataawa ourselves, we would not have been prepared to believe that he had issued the fatwa.

We must emphasise that the error in no way whatsoever detracts from the authority, the Knowledge and rank of Hadhrat Mufti Rashid (rahmatullah alayh). But, even our illustrious Fuqaha had committed errors which they swiftly retracted and corrected when these came to light. Errors of authorities do not diminish their status in their particular fields. Let us now discuss the question and the fatwa.

There are two types of Shirkat (Partnership) in the Shariah: Shirkatul Amlaak and Shirkatul Uqood.

Shirkatul Amlaak is joint ownership of a commodity. Two persons for example own a property or a vehicle or a bag of rice, etc. This type of partnership is not a trade transaction yielding profit for the partners. It is merely a joint ownership of an asset by more than one person.

Shirkatul Uqood is a business enterprise formed by more than one person for the purpose of gaining profit by means of trade. There are several types of such partnership. The one with which we are concerned here in relation to the question is known as Shirkat-e-Inaan. In this type of partnership, all the partners invest capital and derive profit. In the event of loss, they share proportionately.

Among the conditions (Sharaait) for the validity of Shirkat are the following:

* That the profit-share must be known and stipulated. There must be no ambiguity in this condition. Ambiguity renders the Shirkat contract Faasid.

* That the profit which a partner obtains must be a diffusion in the whole of the profit. In the terminology of the Fuqaha this is termed Juz’an shaaiun fil jumlah. In other words, it is not permissible for the percentage profit-share to operate in only the balance of the net profit after a fixed sum of the net profit has been set aside for a partner for any reason whatsoever. If a partner’s share is 40% for example, he is entitled to 40% of the entire sum of the net profit. In this regard, the following appears in Badaaius Sanaai’:

“Among its conditions (of validity) is that the profit should be a part which permeates the whole (of the profit), not a fixed part. If they (the partners) fix ten dirhams (for example) or a hundred dirhams, etc., (for any partner), the shirkat is faasid.”

Badaai also states: “If the partners stipulate the profit proportionate to their respective capital investment whether their respective capital investment is equal or unequal, then this is undoubtedly permissible. The profit will be between them in terms of the agreement regardless of whether the labour was stipulated on one of them or on both. And (in this case) the loss will be in proportion to their respective capital investment whether their investment is equal or unequal.” (Vol. 6 page 62)

All the kutub of the Fuqaha, both the Mutaqaddimeen and the Muta-akh-khireen, are unanimous in this mas’alah, namely, partners in a Shirkat (trading partnership) are entitled to only profit, not to profit and to a specific sum of the profit regardless of whether the fixed sum is termed wages, salary, bonus, etc. The stipulation of a fixed amount of money for a partner renders the partnership faasid (corrupt and invalid).

There is no difference of opinion among our Fuqaha on this issue. It is therefore surprising for some Muftis in our age to present a dissenting view on a mas’alah on which there is consensus.

Hadhrat Mufti Rashid’s error lies in the fact that he has ignored the Nass (explicit ruling) of the Fuqaha on this issue. He further proceeded to nullify the unanimous ruling with his opinion by presenting an exceptionally weak and minority view pertaining to a mas’alah related to Shirkatul Amlaak (the first kind of Shirkat) whereas all the Fuqaha were well aware of the masaail relating to this type of partnership in commodities. Despite the Fuqaha expounding the masaail pertaining to both types of Shirkat and being fully aware of the mas’alah which Hadhrat Mufti Rashid Saheb has made his mustadal (basis of deduction), they categorically ruled that a fixed amount may not be stipulated for a partner.

The argument that the working partner is entitled to a wage in lieu of his labour is baseless because:
(1) It is an argument presented in negation of the consensus of our Fuqaha. For the Muqallideen, the Nass of the Fuqaha is binding and adequate.
(2) Partners in a Shirkat are entitled to profit A partnership is created for this very purpose, not for wages.
(3) The reward of investment of capital is profit, not wages. Such a fixed amount is in the category of Riba since it is an excess which has no material commodity as its equivalent. The reward of the invested money is the profit-share. If the reward is a fixed sum of money as well, this is tantamount to riba.
(4) The analogy of Mudhaarabah partnership illustrates that despite all of the labour being stipulated on the one partner, the Mudhaarib, he is entitled to only his profit-share, not to profit plus a wage.

The issue of stipulation of labour is not a new development of this age.. It had existed at all times in every age. In fact, the Fuqaha have elaborated on the issue of stipulation of labour on either one of the partners or on the others as well. In certain cases the stipulation of labour on a partner, produces different effects. But never has the effect of stipulation of labour in any case been wages for a partner.

The effect of labour stipulation on a partner in some cases renders the contract invalid; in some cases valid. But never is the effect wages for the partner on whom the labour is made a condition.

The attempt to legalize wages for one partner in addition to his profit-share is in effect to abrogate the fourteen century consensus of the Fuqaha. It is a serious issue. In fact, it is a massive error.

What is indeed surprising is the totally blind eye turned to the Tasreehaat (explicit and categoric rulings) of the Fuqaha of all ages on this issue. The very stipulation of a fixed sum under whatever guise and designation for a partner, nullifies the Islamic concept of Shirkat which provides for sharing of the profits only by the partners.. While the stipulation of a salary renders the partnership invalid, the claim that salary for a partner is permissible is tantamount to the abrogation of the concept of Shirkat.

The rationale that since the working partner applies both labour and capital, he should be entitled to a wage as well, is devoid of Shar’i substance. The Shariah was well aware of the capital plus labour of a partner or partners. It is a simple fact of logic or commonsense that the partners or at least one partner in a Shirkat will have to apply expertise, labour and effort. This commonsense did not emerge in this age. It existed from the very time when the Shariah’s law of Shirkat came into being. Despite this awareness, there has always been explicit prohibition.

Secondly, the haqeeqat (meaning/reality) of Shirkat rationally precludes the stipulation of a fixed sum for a partner. Thirdly, the Shirkat can adequately accommodate and reward the working partner within the ambit of its meaning and terms. The simple solution is to increase the profit ratio of the working partner.

Now when there is ample scope within the existing confines of Shirkat to adequately reward the working partner without corrupting the contract with infringements, what is the imperative need to bend over backwards to search for straws with which to construct a basis for permissibility of an act which the Shariah has prohibited from the very inception fourteen centuries ago?

Categorically refuting the contention of a wage for a partner, Shamsuddin Imaam Sarakhsi (rahmatullah alayh) states in Al-Mabsoot, Vol. 6, page 109:

“Entitlement to profit (in a partnership) is by way of Shirkat, not by way of Ijaarah (employment contract). It is for this reason that in it (Shrikat) the amount of work is not specified nor is the time duration. The worker in the partnership is not entitled to wages.”

This mas’alah stated by the illustrious Imaam is adequate Nass for us on this issue. This mas’alah, we think, cannot be expressed with greater clarity than this Nass of Imaam Sarakhsi. This is a ruling on which there exists Ijma’ of all our Fuqaha of the Ahnaaf. The attempt to negate this consensus in this era with analogies in which the basis has no relevancy to the issue under discussion is inappropriate and erroneous, to put it mildly.

Hadhrat Mufti Rashid (rahmatullah alayh), in his Ahsanul Fataawa, has averred that it is permissible to stipulate a wage for a partner. With due respect to Hadhrat Mufti Rashid Saheb, who was among the senior Ulama of contemporary times, we have to say that he has erred in his fatwa.

Hadhrat Mufti Saheb has presented copious narrations of the Fuqaha in justification of his view. However, most of the cited narrations refute his opinion of permissibility. In fact, all the narrations which he has cited pertain to Shirkat-e-Amlaak, not to Shirkat-e-Uqood to which our question is related.

The narrations presented in the fatwa do not deal with Shirkatul Uqood, more specifically with Shirkatul Inaan. He firstly cited a number of narrations from authoritative kitaabs of Fiqh. All these narrations pertain to the question of whether it is permissible to pay a joint owner of a commodity a wage for transporting the jointly-owned commodity. Zaid and Amr jointly purchased a bag of rice. Zaid transported the bag of rice to the destination. Is Zaid entitled to a wage for having transported/carried even Amr’s share in the bag? The senior Fuqaha all say that a wage for Zaid is not permissible in this case. A handful of later-day Ulama aver permissibility.

Even in regard to this issue, the official ruling of the authoritative Fuqaha is on impermissibility of paying a wage to the joint owner for having transported the commodity. By means of extremely weak citations, Hadhrat Mufti Rashid Saheb has averred that it is permissible to pay the joint owner a wage in this instance. After he had declared this to be permissible, he extended the permissibility to the unanimous prohibition of paying wages to a partner in Shirkatul Uqood.

But the analogy is incorrect since the basis on which the permissibility of wages for a partner in Shirkatul Uqood is structured is related to entirely another question which is widely divergent. Furthermore, this defective analogy has been utilized to negate a ruling on which there exists unanimity. In addition it annuls the very concept of Shirkatul Uqood. It also dispenses of a vital shart (condition) imperative for the validity of Shirkatul Uqood.

A great deficiency in the ruling of permissibility for even the question pertaining to Shirkatul Amlaak, is the fact that Hadhrat Mufti Rashid Saheb had simply ignored the view of the Jamhoor Ahnaaf Fuqaha and had opted for the view of a tiny minority of the later Ulama, and that too on entirely another issue.

Besides the fundamental difference between the two questions, the thrust of the Shariah regarding even the cited mas’alah of hamlut ta-aam (carrying the bag of food) is on the prohibition of wages for the joint-owner who carries the jointly owned bag of grain. This mas’alah (of hamlut ta-aam) does not constitute even a weak basis for the issue of wages for a partner in a Shirkat business in which the acquisition of profit is the goal.

Ahsanul Fataawa in opining permissibility of wages for a partner, makes the following sweeping claim: “There is no Nass of the Shariah to prove the impermissibility of engaging a partner as a hired worker.”

This averment is indeed preposterous. We have already cited the Nass mentioned in Badaaius Sanaai’ and Al-Mabsoot of Imaam Sarakhsi. Every kitaab of Fiqh clearly and explicitly defines the concept of Shirkat. The Nusoos in all the Kutub of Fiqh are more than adequate to refute the contention of Ahsanul Fataawa.

Ahsanul Fataawa also states: “There is no narration regarding this issue from Hadhrat Imaam (i.e. Imaam Abu Hanifah)—rahmatullah alayh.”

If Hadhrat Mufti Rashid Saheb was unaware of a narration which is directly attributable to Imaam Abu Hanifah (rahmatullah alayh), it does not follow that there does not exist any such narration. No man, irrespective of his erudition and vastness of knowledge can claim to have encompassed Ilm in entirety. There are thousands of questions and narrations of which Hadhrat Mufti Rashid Saheb and all Ulama are unaware. The citation of unawareness/lack of knowledge is never a daleel.

Assuming that there truly is no recorded narration of Imaam Abu Hanifah (rahmatullah alayh) reported, then there are narrations of innumerable Fuqaha of the Ahnaaf among whom are the illustrious Mujtahideen such as Imaam Abu Yusuf, Imaam Muhammad (rahmatullah alayhima) and others of the highest calibre.

Innumerable fataawa of the senior Sahaabah who were the Ustaads of the Aimmah-e-Mujtahideen are not reported or attributed directly to them. Nevertheless, their illustrious Students transmitted such fataawa to posterity.

Furthermore, it is only reasonable to infer that Imaam Abu Hanifa’s illustrious Students such as Imaam Abu Yusuf and Imaam Muhammad and others must have heard the exposition of their Ustaad on this issue. Moreover, the lack of a riwaayat (narration) from Imaam Abu Hanifah is not a licence for discarding an emphatic ruling of the Shariah, especially when such ruling has enjoyed 14 centuries of consensus and acceptance.

Ahsanul Fataawa in support of its contention states: “It is merely the qaul (statement) of Imaam Muhammad (rahmatullah alayh), but no rationale (illat) is narrated from him (for his view).” If it was not for the seniority of Hadhrat Mufti Rashid Saheb (rahmatullah alayh), we would have been constrained to deal with this averment in entirely a different manner and with a more strident tone. However, taking cognisance of Hadhrat Mufti Rashid’s seniority and Knowledge, we shall restrict ourselves to mere dismissal of his averment as being utterly baseless.

It is totally unacceptable to imply that the third highest ranking Mujtahid of Islam after Imaam Abu Hanifah, namely, Imaam Muhammad bandied out views devoid of rationale. If his rationale has not been reported or if it has escaped the research of Hadhrat Mufti Rashid Saheb, it cannot be concluded that there was no rationale (illat) for his view.

It is a simple fact of Islamic logic that a Mujtahid does not speak without daleel. It is quite possible that Hadhrat Mufti Saheb was unaware of such kutub which do expound the illat of the view of Imaam Muhammad (rahmatullah alayh).

Of immediate importance for us for practical adoption is not the rationale. It is the hukm— the ruling which constitutes the law to which we have to submit whether we are aware of the illat or not, and whether we understand it or not.

Hadhrat Mufti Rashid Saheb, in his fatwa, has also attempted to bolster his view of permissibility on the basis of Ta-aamul-e-Naas or the prevalent customary practice of the people. While Ta-aamul does have applicability in the Shariah, the ground is extremely delicate and the manner in which men of shallow learning of this era interpret and understand this principle, is quite dangerous.

In terms of the understanding of this principle by the Muftis of the era the entire Shariah will be abolished on the basis of Ta-aamul. Riba, maisar (gambling), zina, abandonment of hijaab, immodest dress, exposure of satr, adoption of the salient features of the kuffaar, in short, every baatil and haraam act could be ‘legalized’ on the basis of the understanding of this principle by the men of superficial knowledge in our day and age.

On the basis of present-day understanding of the principle of Ta-aamul every faasid and baatil business deal can be proclaimed halaal. Bank interest in which there is ‘ta-aamul’, will have to be legalized on the basis of the convoluted understanding of this principle displayed in this era. There will then be no need for the Divine Shariah to govern our daily life. The new shariah will be Ta-aamul-e-Naas. Whatever the dumb masses instiutute will be permissible. This is the meaning of Ta-aamul and Urf in today’s minds.

Hadhrat Mufti Rashid’s attempt to render permissible wages for a partner in terms of the principle of Ta-aamul has no validity. Firstly, there is no valid Ta-aamul of the People of Islam in this sphere. The Ta-aamul of the Ummah from the earliest era of the Shariah has always been the prohibition of wages for a partner.

The system of capitalism of our age cannever constitute valid Ta-aamul for the abrogation of a 14 century unanimous Hukm of the Shariah. The customary trade practices of the kuffaar do not entitle a Mufti to issue a fatwa cancelling a Shar’i hukm for the sake of conferring Shar’i status to the practice of the kuffaar. There is no substance in the Ta-aamul argument which Ahsanul Fataawa presents for its view of permissibility.

Ahsanul Fataawa also endeavours to substantiate its view by means of an analogy with the muthaarib (the working partner in a Mudhaarabah partnership). Thus the fatwa states: Support for this (view of permissibility) is also from mudhaarabat. The mudhaarib acquires benefit from joint-work.”

This succinct statement is highly ambiguous. Firstly, the mudhaarib’s profit-share is predetermined and fixed at the time of the contract. He is not entitled to anything in excess of his fixed profit-share. Secondly, a wage for him in addition to his profit-share has been categorically prohibited by all our Fuqaha. Thirdly, labour/work cannot be stipulated in the contract on the Rabbul Maal (the investor of capital). Such a stipulation invalidates the Mudhaarabah contract. Fourthly, if a wage is stipulated for the mudhaarib in addition to his profit-share, the contract remains valid, but the stipulation of wages is baatil, and it automatically falls away. The mudhaarib is not entitled to a wage and has no such claim regardless of the condition made.

The ‘joint-work’ mentioned by Hadhrat Mufti Rashid Saheb is a reference to the Rabbul Maal assisting the mudhaarib in the business. This ‘joint-work’ produces absolutely no change in the original Mudhaarabah contract. Both partners in this contract receive only their respective stipulated profit-shares. None of the parties in this arrangement is entitled to wages, neither the Mudhaarib nor the Rabbul Maal.

It is significant that inspite of the Rabbul Maal assisting his partner, he cannot claim a wage nor can a wage be arranged for him. Even if he slogs night and day to make the enterprise a success, a wage cannot be arranged for him, neither at the time of the contract nor at a later stage. All the labour and expertise —brains and brawn—which the Rabbul Maal contributes to the joint Mudhaarabah venture are gratis.

It should therefore be abundantly clear that the analogy with the partners of Mudhaarabah far from supporting the permissibility postulate, actually negates it. The analogy actually reinforces the view of prohibition.

It should be quite clear now that a salary for a partner in addition to profit is not permissible.

Last Updated on Thursday, 30 September 2010 20:15  

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