Malawi Employment Queries

Malawi Employment Queries

Question

I am writing from Malawi. My query relates to Islamic guidance on the rights of employees, particularly financial and employment-related rights, in a context where local labour laws exist but are often not fully adhered to within our community.

Within our Indian community in Malawi, many Indian employees are employed by Indian employers without any formal written employment contracts (as these are often known people friends/family friends/relatives etc). In most cases, no written terms exist regarding working hours, annual leave, sick leave, overtime, gratuity, or other employment benefits. Typically, the employer and employee agree verbally on a monthly salary and work commences. Some employers respect working-hour laws, while others are unaware of, or choose not to follow the labour laws.

Employees are also generally unaware of their legal and Sharʿī rights or afraid to request these. In many cases, Indian employees work beyond the maximum daily working hours, including weekends and Sundays (or any other mandatory weekly day off as per Malawi law), without any clear agreement or compensation for overtime worked. The employers are of the view that the higher salaries (as compared to Malawian staff) should compensate this. Indian employees are generally paid well above the minimum wage.  However, these salaries are usually not properly recorded in the business books and are paid in cash to avoid the tax, pension contributions, and other statutory obligations. In some cases, only a minimal figure is reflected in the accounting records to avoid scrutiny by the tax authorities. Many employees work for several years continuously, sometimes without taking a single day of annual leave, apart from occasional sick days or short family visits.

Malawi labour law (similar to many other jurisdictions) clearly stipulates minimum employment standards, including: minimum wages, compulsory pension contributions (or gratuity where pension does not apply), annual leave (minimum 18 days per year), sick leave, maternity and paternity leave and weekly rest days. These benefits/entitlements are mandatory by law.

My questions relate mainly to relatively unskilled Indian labour, who often accept whatever work is available due to lack of alternatives and fear of losing employment. Skilled Indian workers generally insist on written contracts and are therefore less affected.

My questions are as follows:

(1) All-inclusive salary: Is it permissible Islamically for an employer to stipulate (or assume that the employee has accepted an amount) an “all-inclusive” salary, for example, “MK 1,000,000 per month includes all remuneration such as overtime, annual leave pay, gratuity, severance, etc.”?

Further, under Sharīʿah, is an employee still entitled to benefits such as annual leave, maternity/paternity leave, weekly rest days (Sundays), and/or payment in lieu of such leave, where these are required by Malawi labour law, even if the salary is described/claimed as all-inclusive?

(2) Leave not clarified at commencement: Where the amount of annual leave (18 days minimum per year as per Malawi law) was not clarified or discussed at the start of employment, does the employer still have an obligation Islamically to grant the leave, or pay in lieu of leave? Or is the employer only obliged once the employee explicitly requests it — especially in situations where the employer is aware of the legal obligation, but the employee is afraid to raise the issue due to fear of losing his job?

(3) Pension and gratuity: Generally, Indian employees are not registered on the compulsory pension scheme in Malawi (where the employer contributes 10% and the employee 5% of monthly salary). Malawi labour law states that where an employee is exempted from the pension scheme, the employee is entitled to gratuity, calculated as 5% of the employee’s current monthly salary multiplied by the number of months worked, payable upon termination of employment. From an Islamic perspective, is the employee entitled to this gratuity? Is it permissible for the employee to demand or claim this gratuity upon leaving employment?

Additional clarification under Point (3): In some cases where employees do complain or raise the issue of gratuity, employers offer gratuity only on the minimum salary amount reflected in the business books or bank records, and not on the full salary actually paid in cash. The employers argue that the officially recorded salary is the only amount that can be legally or evidentially proven, and therefore gratuity, if payable, should only be calculated on that amount. From a Sharʿī perspective, should gratuity be calculated on the actual salary that was agreed upon and paid to the employee, even if paid in cash and not fully recorded? Or is it permissible to calculate gratuity only on the salary reflected in the accounting records or bank transactions, despite the employer knowing that a higher amount was in fact paid? Additionally, does the employer’s intentional under-recording of wages affect the Sharʿī ruling regarding the employee’s entitlement?

At present and over the past, the prevailing practice within Indian-owned businesses is that gratuity, overtime pay, paid leave, and public holidays are generally not paid or honoured, and most employees do not complain to the labour office due to fear of unemployment and lack of alternative opportunities.

I would greatly appreciate your Sharʿī guidance on these matters, particularly in light of the absence of written contracts, the existence of clear labour laws, long years of service rendered by employees and the imbalance of power between employer and employee.

بسم الله الرحمن الرحیم

Answer

Islam has placed huge emphasis on the rights of employees and also their responsibilities towards their employers and vice versa. The relationship between an employer and employer is based on an Ijārah contract, as a service is provided in exchange for a wage. It is the responsibility of both parties to mutually agree the contractual terms and fulfil their responsibilities accordingly. Employers should consider the rights of the employees at all times. It is therefore of paramount importance that all the issued raised in this question are clearly documented in writing at the outset or agreed verbally as a minimum to avoid any disputes later.

Your specific questions are now addressed:

(1) It is permissible from an Islamic perspective to stipulate an all-inclusive salary as described, as long as the terms are clear at the outset including the number of overtime hours and the number of days of annual leave if any. If this is agreed at the outset, then both the employer and employee should adhere to this. Employers must however ensure that the employees are not placed at a disadvantage and their increased all-inclusive salary should take into account the benefits stipulated in the Labour laws. The Labour laws are there to protect the rights of the employees. It would therefore be incorrect to remunerate employees based on the minimum wage whilst simultaneously denying them the other rights.

(2) If the issue of leave or any other matter is not agreed between the employer and employee at the outset, then the Labour laws will apply even if the employee does not request this.

(3) If the employer and employee had agreed in advance regarding the right to a gratuity and the calculation method, this will take precedence. Otherwise, the Labour laws will apply and the employee will be entitled to gratuity based on their actual salary not the declared salary.

قال الله تعالى: يا أيها الذين آمنوا أوفوا بالعقود، الآية. وقال رسول الله صلى الله عليه وسلم: الصلح جائز بين المسلمين، إلا صلحا حرم حلالا أو أحل حراما، والمسلمون على شروطهم، إلا شرطا حرم حلالا أو أحل حراما، رواه الترمذي (١٣٥٢) وصححه، وأبو داود (٣٥٩٤). وقال السمرقندي في التحفة (٢/٣٤٧): وشرط جوازه أن تكون العين المستأجرة معلومة والأجرة معلومة والمدة معلومة بيوم أو شهر أو سنة، لأنه عقد معاوضة كالبيع، وإعلام المبيع والثمن شرط في البيع فكذلك ههنا، إلا أن المعقود عليه ههنا هو المنافع، فلا بد من إعلامها بالمدة والعين والذي عقدت الإجارة على منافعه، انتهى. وجاء في مجلة الأحكام العدلية (ص ٨٦): المادة ٤٥٠: يشترط أن تكون الأجرة معلومة. المادة ٤٥١: يشترط في الإجارة أن تكون المنفعة مملوءة بوجه يكون مانعا للمنازعة. وجاء فيه (ص ١٠٥): المادة ٥٦٥: لو استخدمت العملة من دون تسمية أجرة تعطى أجرتهم إن كانت معلومة، وإلا فأجر المثل ومعاملة الأصناف الذين يماثلون هؤلاء على هذا الوجه. وجاء فيه (ص ١٠٦): المادة ٥٧٤: كل ما كان من توابع العمل ولم يشترط على الأجير، يعتبر فيه عرف البلدة وعادتها، كما أن العادة في كون الخيط على الخياط۔

Allah knows best

Yusuf Shabbir

24 Shaʿbān 1447 / 13 February 2026

Approved by: Mufti Shabbir Ahmed and Mufti Muhammad Tahir