Business Ethics In Islam
Islam instructs its followers to observe certain ethics when they engage in financial transactions, including the following:
Honesty: Islam requires its adherents to be honest in their dealings with Muslims and non-Muslims alike. Indeed, honesty is one of the most important moral principles which testifies to a Muslim’s devoutness. Its importance is indicated in a number of Qur’anic verses and traditions of the Prophet peace & blessings be upon him , including the following: Allah says, “Allah commands you to deliver trusts back to their owners.” (Soorat An-Nisaa’, 4:58)
The Prophet considers betraying the trust as one of the signs of hypocrisy: “The signs of the hypocrite are three: when he speaks he lies, when he promises he breaks his promise and when he is entrusted he betrays the trust.” (Saheeh Al-Bukhaaree: 33; Saheeh Muslim: 59)
Honesty is among the characteristics of the believers whom Allah calls ‘‘successful’’ because they “honour their trusts and their contracts”, among other traits. (Soorat Al-Mu’minoon, 23:8)
It is for this reason that the Prophet peace & blessings be upon him considers those who do not fulfil the terms and conditions of the trusts which are placed in their charge to have no faith: “The person who does not fulfil the terms of his trust has no faith.” (Sunan Ahmad: 12567)
The Prophet peace & blessings be upon him was known by his honorific title of As-Saadiq al-Ameen (the truthful and trustworthy) before the advent of Islam, for he was the epitome of honesty in all his dealings.
Your Financial Transactions
Allah commands and encourages Muslims to earn their livelihoods. This is clear in a number of aspects including the following:
The Prophet has forbidden us from begging as long as we are able to earn a livelihood and informs us that those who engage in begging despite their ability to scrape a living, lose their dignity in the sight of Allah and that of people: “A person who unnecessarily continues to beg will stand before Almighty Allah [on the Day of Judgement] without a shred of flesh on his face.” (Saheeh Al-Bukhaaree: 1405; Saheeh Muslim: 1040)
He also said, “If a person who is afflicted with poverty refers it to people, his poverty will not be brought to an end; but if he refers it to Allah, Allah will soon give him sufficiency.” (Sunan Ahmad: 3869; Sunan Abu Daawood: 1645)
Islam respects all types of occupations in any field, trade, industry, services, investment or in any other field, as long as they are lawful and do not involve any wrongdoing whatsoever. Indeed, Islam informs us that prophets engaged in decent occupations prevalent in their societies. As the Prophet ? said, “Allah did not send a prophet who did not tend sheep.” (Saheeh Al-Bukhaaree: 2143) He mentioned once that Prophet Zachariah ? was a carpenter. (Saheeh Muslim: 2379)
A person who engages in an occupation with the intention of supporting himself and his family and helping the needy will be abundantly rewarded for his effort.
Usury (Ribaa)
Usury (ribaa): is the practice of assigning a fee on credit and other borrowed assets on top of the principal borrowed amount, thus making a profit on the loan, which is strictly prohibited in Islam due to the harm and injustice involved in it.
Ribaa is of different types, but the most serious type of ribaa, and thus the one that is all the more unlawful, is one relating to loans and debts. It covers any stipulated additional amount over the principal in a transaction of loan or debt and is of two types.
Every loan or debt from which the lender makes a profit is a form of ribaa.
Ribaa on Debts
This type of ribaa exists in every debt, which carries a stipulation binding the debtor to pay to the creditor any sum of money in excess of the principal sum of the debt.
Example: John borrows £1000 from Martin and promises to pay it back after a month. However, John finds himself unable to pay the debt off after a month and so Martin, the creditor, stipulates that John either pays the debt off without any excess of the principal sum of the debt or pay £1100 after another month. If, however, he still cannot possibly pay that sum off either after a month, Martin will defer payment another month on condition that John pays £1200.