Understanding Ethics with Islamic Perspective

Chapter 6
PHIL 3108 – Business Ethics
UNWE 2216 - Working Ethics
Topics covered
Outcomes Covered (3 & 4):
(3) Understand the effects of religion and society on values
(4) Understand the effects of Islamic and Omani values on work ethics

Learning Objectives:
This chapter will help the students:-
• To understanding of ethics from Islamic perspectives.
• To understand the fundamentals of Islam and its effects on individual, work and
organizational ethics.
• To understand the effects of society on individual, work and organization values.
• To understand the effects of Islamic and Omani values on work ethics
Topics covered
• Meaning of religion
• Islam as a religion
• Work Ethics in Islam
• Effect of Islam on Business Ethics
• Prohibited matters in business practice in Islam
 Meaning of Religion and Islam
• Religion is defined as “expression of man’s relationship with the Supernatural”.
• It is the person’s strong beliefs in powers that control his destiny.

Islam:
• Is the world’s second largest religion.
• Fastest growing religion in the world.
• Has over one billion people following it and they are called Muslims.
 Meaning of Religion and Islam
Islam:
• Means “submission to God.” Therefore, “a Muslim is one who strives to submit to
God.”

As Muslims,
• Our values are deriving from Islam and mainly from the
• Holy Quran which is the primary source of Muslim’s faith and practices and from
the
• Prophet Muhammad’s [Peace be upon him] sayings and practices which are the
second fundamental source.
 Work Ethics in Islam
Work Ethics is defined as the application of morals and ethical standards to
different work situations.

• It deals with issues of:

 Right and wrong of activities
 Decisions and situations at the workplace
 Professional practices
 Organizational settings.
Effect of Islam on Business Ethics
1. Freedom of Enterprise
2. Trade through Mutual Agreement
3. Honesty in Business Transactions
4. Bounty and humanity in business contacts
5. Fulfilling Business Obligations
6. Fair Treatment of workers
 1. Freedom of Enterprise
• Islam gives complete freedom to individuals to establish economic enterprise.

• Each individual can choose the suitable business that helps him keep good life
condition but this business should follow the limits set by the Islamic Sharia [law].

• In dealing with enterprises an individual according to Sharia, should make sure he

is trading in lawful activities which cause no harm to customers or market.
 2. Trade through Mutual Agreement
• This means that there is no sale between the seller and buyer unless both have
agreed on the price and quantity of the goods.
• Islam strictly prohibits such dealings in which both the parties are not clear.
• Moreover, every Muslim business transactions should be written and must be
cleared by all parties.
• Prophet Muhammad [Peace be upon him] is reported to have said:
• “A sale is a sale only if it is made through mutual consent”. (Ibn Majah, No: 2176)
 3. Honesty in Business Transactions

• Honesty is the “quality of being fair and truthful “.

• It is a very basic principle of business transactions in Islam.
• Honesty about the products’ quality and price is an example.
• The seller and buyer must be honest in dealings there would be no other
motive which make a transaction fraudulent and in which both become guilty.
 4. Bounty and humanity in business contacts

• Islam emphasizes that one should be soft and flexible in business transaction.
• The dealing between buyer and seller should be on humanity basis.
• Islam is strictly prohibiting from hard words and harsh language in business dealing.
• Prophet Muhammad [Peace be upon him] says “May mercy be on him who is soft and
decent in his dealing with others.”
• Several verse from the holy Quran shows that hard words and language must not be used
while dealing or talking with others.
• Allah says in His book “And be moderate in your walking and lowering your voices” (31:19)
 5. Fulfilling Business Obligations
• Islam imposes a great importance to the fulfillment of business promises and
obligations.
• A Muslim trader should keep up his trusts, promises and contracts as this is
considered as Islamic ethical behavior.
• The Holy Qur’an emphasizes the moral obligation to fulfill one’s contracts and
undertakings.
• A verse states thus: “O you who believe fulfill [your] obligations.” (5:1)
 6. Fair Treatment of workers
• The relation between employer and employees should be harmonious.
• This is the responsibility of the employer that he should provide all the basic things
including fair wages, provide him good working condition, and treat them ethically.
• Prophet Muhammad [Peace be upon him] said: “The wages of the workers must be paid
before the sweat dries upon his body” (Ibn Majah No. 2434).
• In Another place Prophet Muhammad [Peace be upon him] said, “I will be opponent to
those persons on the day of resurrection who does not give him his due to a person who
have finished work for him”
Prohibited matters in Business (Islamic Values)

1. Dealing in Prohibited Items (‫)المحرمات‬

2. Prohibition of Interest (Riba)
3. Sale of Uncertain items (Risks, assumption)
4. Hoarding Foodstuff(‫)احتكار‬
5. Randomly Fixing the Prices
6. Trickery (‫)التحايل‬
7. Cheating (‫)الغش‬, Bribery (‫ )رشوة‬and Fraud (‫ )التزوير‬in Business Transactions
8. Giving Short Measures
9. Swearing
10. Dealing in Stolen Goods
1. Dealing in Prohibited Items (‫)المحرمات‬

• There are some items which are prohibited to be traded with such as
carrion, pigs and idols.

• Carrion would mean the flesh of any animal or bird dead from natural
causes, or not being properly slaughtered in an Islamic way.
2. Prohibition of Interest (Riba):
• One of the most concerns of Islam in business practice is dealing with
Riba (Interest).

• Islam has forbidden all forms of Riba due to great deal of harm to both
individual and society.
3. Sale of Uncertain items (Risks, assumption):

• Sale of commodity or goods which is not present in hand is

prohibited because the quality, whether good or bad, is not
known to the buyer at the time of the deal.
4. Hoarding Foodstuff: (‫)احتكار‬

• Hoarding means storing foodstuffs in expectation of rise in their

prices when it is not available in the market any more.

• The consumers are left with no choice after the price raises but to
purchase the item from the one who hoards. This practice is not
ethical as per Islam perspectives.
5. Randomly Fixing the Prices:
• It is prohibited to sell a commodity at different prices for
different customers.

• Price for one item in one shop should be uniform.

6. Trickery (‫)التحايل‬
• Trickery is when a person collaborate with the seller and offers a high
price for something, in front of another customer without intending to
buy it, but just to cheat or defraud the other person who really means to
buy it and force him to pay higher price for the item.

• This type of fraudulent transaction is totally prohibited in Islam.

7. Cheating (‫)الغش‬, Bribery(‫ )رشوة‬and Fraud
(‫)التزوير‬in Business Transactions

• Islam strongly prevents all cheating practices in business

transactions.

• The traders and businessmen generally tend to motivate the

customers to pay for their products by adopting fake business
practices and obtain the business contract by paying the bribe to
authorities.
 8. Giving Short Measures
• Another form of dishonesty is to manipulate weights and measures.
• It refers to the act of taking full measures from others and giving them short
measures in your turn.
• Giving short measures was a common malaise plaguing the pre-Islamic days.
• “Give the full measure when you measure and weigh with a balance that is
straight.” (17:35)
• “And O my people, Give full measure and weight in justice and reduce not the
things that are due to the people, and do not commit mischief in the land,
causing corruption.” (11:85)
9. Swearing:
• The traders often take choice of swearing to emphasize that their items are of good
quality.
• They claim qualities which don’t exist.
• They try to convince the buyers to purchase their commodity by swearing in the name of
Allah.

10. Dealing in Stolen Goods:

• The stolen items are neither to be bought nor sold by those who know the truth.
 Case - 1 (Using Low Quality Materials):
• Bader was recently promoted as Assistant Product Manager in Elite Furniture, a manufacturer of quality
furniture. During his work in the new position he has discovered that the Purchasing Manager had recently
started buying an inferior (low quality) wood to make table. The table would last about half as long as the
regular table; but the lower quality could not be detected by the buyer.
• When Bader revealed this information to his boss, he was told that the Purchasing Manager was following
orders from top management. The company was having financial difficulties and had to cut costs. The change in
table quality was a quick and safe way to do so. Bader argued that selling inferior merchandise as quality
product was no way to solve budget problems, but his opinion was not heard by anyone in the management.
• Elite Furniture products are always known for quality which Bader had stressed to his customers. He could
imagine that image of the shop going down quickly as consumers began to experience the low quality materials
in near future.
(1) What is the ethical issue related to this case?
(2) Identify the ethical dilemma.
(3) If you were in the place of Bader what will you do?
 Case - 2 (Overcharging Customer):
• Abdulla is a manager in a Restaurant. Twenty two people are working in the restaurant. Some are
cooks. Some are suppliers. Some are customer care in-charges and so on. Owner of the company
rarely comes to the restaurant as Abdulla manages the business very efficiently.
• Also he is very pleasing in behavior. Some days, he gets some mega order like wedding parties,
celebration etc. Usually he takes normal charges from customers.
• But big party bills he manipulates the amount and gets more money. For example, for one chilly-
chicken normal price is R.O.2.500, but in party bills he charges R.O. 3.500.
• In many items he does like this and gets a good money. This money he never gives to his owner.
Nor does he take anything from this. Instead he gives this to his staffs who work hard for the success
of the restaurant.
1. What is your opinion on Abdullah’s action?
2. Is his action ethical or not?