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Fatwa CenterDefining usury
Question
I heard in a lecture a trustworthy Shaykh saying that any money received for nothing in return is usury (Ribaa). Is this true? If that is the case, what is the ruling of retirement and social security or what some companies give to their employees so they quit their jobs?
Answer
All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad, sallallaahu ‘alayhi wa sallam, is His slave and Messenger.
Muslim scholars defined Ribaa (usury or interest) as the surplus of money a person receives in return for nothing when he exchanges something for something else. There are two kinds of Ribaa, the first one is Ribaa Al-Fadhl, which is taking a superior thing of the same kind of goods by giving more of the same kind of goods of inferior quality whether the things exchanged are food or something else. This kind is strictly forbidden in the Sunnah and by consensus. The second kind is Ribaa An-Nasee'ah, which is an increase in the amount due, in return for a delay in payment.
It should now be quite clear that what we had mentioned above about the definition of Ribaa does not apply to your case because it is not a general rule that any increase that is taken in return for nothing is considered Ribaa. The Shaykh might have meant to define Ribaa in the way we did above but defined it in brief as there are very many cases in which one receives money for doing nothing. Examples of these cases are money received as gifts, wills, and endowments (Waqfs); such people do not exert any effort at all, and yet the way they get this money is lawful based on permissible contracts. As for money given to employees when they quit their jobs, whether through pension or social security, this was previously dealt with in Fatwa 89640.
Allaah Knows best.
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