An Islamic Framework for Employer-Employee Relationships

Abstract

IntroductionIslamic teachings envisage a balanced society achieved through thefunctioning of Islamic institutions. This paper visualizes three main institutions:ukhiwah, ‘adl, and ihsan. Ukhuwah (brotherhood) promotes the bonds ofbrotherhood, and ‘adl (justice) enforces a system of individual and socialobligations. Islam stresses the importance of meeting one’s obligations, becauseeach obligation has its corresponding right. Thus, an individual’s effort to meethidher obligations leads to the fulfillment of everyone’s rights. This does notmean that Islam forbids one from demanding hidher rights, even though thisdemand does pose a problem related to human nature: an individual wants his/herrights and also some part of another person’s rights. Therefore, one group’sdemand for its rights tends to encroach upon the rights of another group, whichcauses social friction and disorder. The institution of ihsan (benevolence) goesone step further: it exhorts individuals to forego their rights for the sake of others,which is considered an act of piety.This paper will study employer-employee relationships in the light of thethree institutions mentioned above. A framework for conducting employer-employeerelationships is formulated and is then used to determine, from theIslamic point of view, the proper wages. The findings of this paper show thatan economically efficient and equitable wage structure can evolve within thisframework and that such a wage structure would promote the parties’ mutualrelationships which, in turn, would lead to industrial peace.The body of the paper is organized as follows: a review of the existingliterature on the subject, the development of an Islamic framework for employer-employeerelationships, a discussion of the Islamic approach to wagecompensation, and some concluding remarks ...