Is a Government Minimum Wage Permissible, and Must an Employer Pay a Living Wage?

Answered by Shaykh Irshaad Sedick

Question

What is the ruling on a government setting a minimum wage? Some claim it is unlawful by analogy with the prohibition on fixing prices. Is that a valid opinion, and is it drawn from Islamic scholarship or from free-market thinkers such as Mises and Friedman? Is an employer obliged to pay a fair wage that covers the cost of living, and is he sinful if he does not, whether because he cannot afford it or because it would cut into his profit and lifestyle? What do Islam and the Shafiʿi school say?

Answer

In the Name of Allah, the Most Merciful and Compassionate.

May Allah give you clarity in what you learn and blessings in what you earn.

In the Shafiʿi school, it is permissible for a government to set a minimum wage, and obeying it is obligatory, because it is not the price fixing (tasʿir) that the school forbids. Even while holding that pricing is forbidden, the Shafiʿi jurists state that if the ruler does fix a price, whoever openly defies it is given a discretionary penalty (taʿzir), because it is open defiance of the ruler, though the sale itself remains valid. [Shirbini, Mughni al-Muhtaj; Dar al-Iftaʾ al-Misriyya, Fatwa 3969] An employer owes what he agreed to pay, in full and on time. Beyond that, the school does not oblige him to pay a living wage, though a ruler may set one.

Price Fixing Is Forbidden Because It Squeezes the Seller

In the Shafiʿi school, it is unlawful for the ruler or his deputy to fix prices, even in a time of scarcity, and the sale of one who breaks the fixed price is still valid. [Ramli, Nihayat al-Muhtaj; Shirbini, Mughni al-Muhtaj] The basis is the reply of the Prophet (Allah bless him and give him peace) when prices rose and the people asked him to fix them: “Allah is the One who sets prices, who withholds and gives, the Provider, and I hope to meet Allah with none of you claiming from me an injustice in blood or property.” [Abu Dawud]

Notice what the jurists say price fixing is. Imam Khatib al-Shirbini (Allah have mercy on him) defines it as the governor ordering the merchants not to sell their goods except at a set price, to their loss, and calls it a restriction on people in their own property. [Shirbini, Mughni al-Muhtaj] It is a ceiling laid on sellers for the buyers’ benefit. A minimum wage is the reverse: a floor laid under the seller of labor, who is the weaker party, binding the buyer. The reason for the prohibition is absent, and an analogy without its reason does not hold. The Kuwaiti Encyclopedia records that the jurists permit fixing wages in some circumstances. [al-Mawsuʿa al-Fiqhiyya al-Kuwaitiyya]

The Shafiʿi and Hanbali schools forbid the ruler from fixing prices [Shirbini, Mughni al-Muhtaj; Ibn Qudama, al-Mughni], while the Hanafis and Malikis allow it to prevent harm. [Zuhayli, al-Fiqh al-Islami wa Adillatuh] Within the school, Ibn al-Rifʿa and others permitted pricing in times of dearth, and this is recorded as a view (wajh) of the Shafiʿis. [Zuhayli, al-Fiqh al-Islami wa Adillatuh; Dar al-Iftaʾ al-Misriyya, Fatwa 3969]

The four classical schools did not address a minimum wage as such. Contemporary fatwa bodies permit the ruler to intervene where need and the public interest call for it, where there is a clear defect in the market, and then only by just means, as a measure against injustice. [International Islamic Fiqh Academy, Resolution 46 (8/5); Dar al-Iftaʾ al-Misriyya, Fatwa 3969]

The Analogy to Price Fixing Does Not Hold

The argument extends a rule about price ceilings on merchants to floors for workers, which is a flawed analogy. The Shafiʿi texts offer no support for it. Indeed, the classical case for fixing labor at the fair wage comes from Ibn Taymiyya and Ibn al-Qayyim (Allah have mercy on them), who called it “obligatory pricing” (al-tasʿir al-wajib). [Ibn al-Qayyim, al-Turuq al-Hukmiyya] Where people need a trade, the ruler compels its workers at the fair wage, and he does not let them demand more than the fair rate, “nor let people wrong them by giving them less than their due.” [Ibn al-Qayyim, al-Turuq al-Hukmiyya] Whether a particular writer took his argument from free-market thinkers is something only he can tell you; the argument is judged by its evidence, and on that it does not stand.

What an Employer Owes

An employer owes the wage agreed upon in the contract. Where no amount is agreed upon, the market wage for that work applies. [Nawawi, Minhaj al-Talibin] He must pay it in full and promptly. The Prophet (Allah bless him and give him peace) said, “Give the worker his wage before his sweat dries.” [Ibn Maja] And he related that Allah Most High will Himself be the opponent, on the Day of Judgment, of “a man who hired a worker, took full work from him, and did not pay his wage.” [Bukhari]

If an employer pays the agreed wage and nothing more, he is not sinful, whether he cannot pay more or simply wants to keep his profit. However, it is wrong to take advantage of a worker’s need by forcing the wage below what the work is worth. Imam Nawawi (Allah have mercy on him), quoting Khattabi, says that a sale made when someone is in need is valid but generally disliked by scholars. Decency means helping the person in need rather than profiting from him. [Nawawi, al-Majmuʿ] If the state has set a minimum wage, paying less than that breaks the law and wrongs the worker.

Some contemporary Hanafi muftis hold that the employer should honor the legal minimum, but that if a worker freely agrees at the contract to less, the contract is not invalid and the income is not unlawful on that basis. [Darul Iftaʾ, Jamiʿat al-Ulum al-Islamiyya, Banuri Town, Fatwa 144708101555] Jordan’s General Iftaʾ Department holds that where the employer knows of the pay and insurance the state mandates, and understands at contract that they are among the worker’s entitlements, the worker may claim them even if the contract is silent, since they are agreed implicitly. [Dar al-Iftaʾ al-Urduniyya, Fatwa 365]

Pay the agreed wage on time, and make sure you pay at least the legal minimum. Taking full work while paying a pittance is against the teachings of Islam, and the worker should be paid at least the customary wage. [Darul Iftaʾ, Darul Uloom Deoband, Fatwa 1979=1569-12/1430] Beyond that, a generous employer needs no reminder. Allah Most High says, “Is the requital of supreme good anything but supreme good?” [Quran 55:60; Keller, The Quran Beheld]

And Allah knows best.

Irshaad Sedick

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Shaykh Irshaad Sedick was raised in South Africa in a traditional Muslim family. He graduated from Dar al-Ulum al-Arabiyyah al-Islamiyyah in Strand, Western Cape, under the late world-renowned scholar Mawlana Taha Karaan (Allah have mercy on him), where he specialized in Shafiʿi fiqh and issuing legal verdicts (ifta). He holds an MA (Cum Laude) in Semitic Languages from the University of Johannesburg and teaches full time at SeekersGuidance.