Are the Commissions Earned for Advancing My Own Funds Permissible?
Shafi'i Fiqh
Answered by Shaykh Muhammad Carr
Question
Is my job halal or haram? I assist merchants by advancing my funds to clear negative balances, and in return, I receive a commission three times the usual amount earned by the merchant. Additionally, I earn a “lucky bonus” as a reward for covering negative balances. Does this arrangement comply with Islamic principles?
ِAnswer
In the Name of Allah, the Most Merciful and Compassionate.
I pray you are in good faith and health. Thank you for your question.
Commissions earned for advancing one’s own funds are impermissible. For instance, if someone says to another, ‘Borrow 100 for me, and I will give you 10,’ this constitutes ji‘ala (a permissible form of commission). However, if the person advances their own funds, they are not entitled to the 10. [Khatib, Mughni al-Muhtaj]
The same applies to the ‘lucky bonus,’ which essentially serves as a commission for covering negative balances.
Please consult a local Islamic finance expert, as there may be nuances in the contract that we are unaware of.
And with Allah alone is our success.
[Shaykh] Muhammad Carr
Checked and Approved by Shaykh Muhammad Abu Bakr Badhib
Shaykh Muhammad Carr has dedicated his life to studying and transmitting our beautiful deen. His studies have taken him around the globe, where he has benefitted from many luminaries. Under the guidance of his teachers – Shaykh Taha Karan, Shaykh Yaseen Abbas, Shaykh Muadh Ali, and many others – Shaykh Muhammad has grown to appreciate the beauty and benefits of diverse scholarship. He completed his memorization of the Qur’an at Dar al-Ulum Zakariyyah in September 1997 and received an Alimiyya Degree in 2006 from DUAI (Darul Ulum al-Arabiyyah al-Islamiyyah). He is also affiliated with Masjid Auwal in Bo Kaap, Cape Town (the oldest mosque in South Africa), where he serves as a co-imam, and Dar Al-Safa, where he has taught since 2018. As a teacher, he imparts the wisdom of our heritage and tradition by opening the door for students. As an imam, he has the unique opportunity to serve his community in daily life.
In addition to his roles as a teacher and imam, Shaykh Muhammad Carr has contributed significantly to the administrative and advisory aspects of Islamic institutions. Since 2023, he has served as the Administrative Director at The Imam Kurani Institute, contributing to the institution’s growth and development. He continues to pursue traditional Islamic Sciences, possessing a keen interest in Islamic Contract Law and Finance. Shaykh Muhammad has been a Shari’ah Board Member for Islamic Asset Management & Insurance Companies since 2001, aligning financial practices with Islamic principles.