Zakah: On (employment) savings
plans
Q724 :Our company deducts ten percent of the salary
of its employees and invests the amount and gives profits or deducts
losses and it also gives an accrued reward as well as earning on that
reward. This makes the money we have in the plan fall under several
items: Savings balance, which an employee takes as a loan or withdraws
at any time. The other amounts will be paid to the employee only if he
resigns or retires. Similarly, if his contract is terminated, the
savings balance will be paid in full but the other amounts may be
with-held totally or partially according to the severity of the offense
which has caused termination. Which of these funds are liable to
zakah?
A724 : I understand that the savings balance refers
to the ten percent deducted from the salary of each employee. As such,
it is part of his own money. According to the terms and conditions you
have outlined, he is liable to withdraw this amount or take a loan not
exceeding its total. The other items which you have mentioned, such as
profits, rewards and earnings on the reward are withheld. An employee
cannot make a claim against them and cannot withdraw them partially or
totally [while still in service]. They are there until he reaches
retirement or leaves the company. Therefore, they cannot be described
as his property although the company acknowledges his right to them
when the time comes. In other words, they are promised to him and there
is no reason to suppose that the promise will not be fulfilled. It is
a condition for any property to be liable to zakah that it should be
fully owned by its proprietor. Full ownership means ability to benefit
by it and dispose of it in a legitimate way, such as selling it or
giving it as a gift or exchanging it for some other property. In the
savings plan which you have outlined, only the "savings balances" seems
to be fully owned by the employee. Therefore, this part is zakatable,
provided that the employee is liable to zakah. To be so liable, he has
to have more than the threshold of zakah, which is equivalent to [the
value of] 634 gm of silver. A person who has this amount in excess of
his normal expenditure should make a note of the date when he came in
to the possession of this amount and on the same day of each following
year, he calculates what he has. If it is still over the threshold of
zakah, then he has to pay zakah on all that he owns of zakatable
property at the normal rate of 2.5 percent. When he makes his
calculation, he should include the savings balance which is fully
zakatable. As to the other items in the plan, they are not fully owned
by the employee. Therefore, they become zakatable only when full
ownership is realized, i.e. when they are paid to him. Upon his
retirement, or resignation, he receives them. On the same day, he
should pay zakah on that amount for one year, provided of course that
he is liable to zakah. If it is in excess of the threshold of zakah,
he has to pay zakah on this amount. If it is not, no zakah is payable.
Our Dialogue ( Source : Arab News - Jeddah )