An Islamic Framework for Employer-Employee Relationships

Abstract

Introduction
Islamic teachings envisage a balanced society achieved through the
functioning of Islamic institutions. This paper visualizes three main institutions:
ukhiwah, ‘adl, and ihsan. Ukhuwah (brotherhood) promotes the bonds of
brotherhood, and ‘adl (justice) enforces a system of individual and social
obligations. Islam stresses the importance of meeting one’s obligations, because
each obligation has its corresponding right. Thus, an individual’s effort to meet
hidher obligations leads to the fulfillment of everyone’s rights. This does not
mean that Islam forbids one from demanding hidher rights, even though this
demand does pose a problem related to human nature: an individual wants his/her
rights and also some part of another person’s rights. Therefore, one group’s
demand for its rights tends to encroach upon the rights of another group, which
causes social friction and disorder. The institution of ihsan (benevolence) goes
one 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 the
three institutions mentioned above. A framework for conducting employer-employee
relationships is formulated and is then used to determine, from the
Islamic point of view, the proper wages. The findings of this paper show that
an economically efficient and equitable wage structure can evolve within this
framework and that such a wage structure would promote the parties’ mutual
relationships which, in turn, would lead to industrial peace.
The body of the paper is organized as follows: a review of the existing
literature on the subject, the development of an Islamic framework for employer-employee
relationships, a discussion of the Islamic approach to wage
compensation, and some concluding remarks ...