Shari’ah Law: A Matter of Belief

Posted on December 16, 2009


Georgina Fuller,

With increasing numbers of Muslims employed in the UK is it time for employers to pay more than lip service to Islamic law? Georgina Fuller reports.

The furore after Dr Rowan Williams, Archbishop of Canterbury, suggested earlier this year that integrating some aspects of Shariah law into the UK legal system might not be a bad idea showed what a highly contentious topic the Muslim law is. The archbishop said we had to face up to the fact that some UK citizens did not relate to the current legal system.

Mohammed Farrukh Raza, managing director of Islamic Finance Advisory & Assurance Services (IFAAS UK), which advises companies on how to become Shariah-compliant, says there is still a lot of confusion about the Muslim faith. It’s up to employers to clear the confusion, he says.

“Employers need to learn exactly what Shariah law is and how it applies to them. But the irony is, that lots of Muslims don’t understand it particularly well,” he says.

With an estimated 1.6 million Muslims living and working in the UK and an increasing Muslim population, Shariah is set to become a pressing issue for employers.

Law origination

The law originates from a combination of sources including the Muslim holy book the Qur’an , the Hadith (sayings and conduct of the prophet Mohammad) and fatwas – the teachings of Islamic scholars.

Raza says Shariah has a lot in common with UK employment legislation although – unsurprisingly – there are some fundamental differences. The prime concerns for employers centre around the fact that Muslims are required to pray five times a day, have the right to refuse to handle alcohol and pork products and cannot participate in any financial incentives (such as bonus schemes and share options) or pension schemes that are not Shariah-compliant. Dress code could also be an issue, with some Muslim women preferring to wear the hijab (headscarf) at all times.

Paul Griffin, employment partner at Norton Rose, says the law firm has started running seminars on Shariah as it is an increasing concern for organisations. “We’re helping more businesses and advising them on how far they should go in complying with Shariah law in the UK,” he says.

“If, for example, you offer a discretionary bonus scheme, you can’t earn or charge interest under Shariah. This can make finance a tricky area for firms to manage. Employers have also got to be aware of loans and share options as Muslim employees can’t be owed something in financial terms.”

Occupational pension schemes could also be a problem if the scheme is investing in a company that sells alcohol or the employer is offering a final-salary pension that may invest in non-Halal (not compliant with Muslim law) companies.

Raza also believes that compensation and benefits are going to become an increasingly hot topic for HR professionals over the coming years, especially in the City. “In terms of benefits, most of the funds employers invest in for share options, pension schemes, bonuses etc are interest-only – which is against Shariah law – so lots of finance houses are turning to Shariah-compliant products,” he says.

“It’s unacceptable for Muslim employees to take part in an interest-based bonus scheme so employees have to miss out – which wouldn’t be fair.”

Local level

It’s difficult to assess the scale of Shariah-compliant investing and banking in the UK. City of London bankers and investment houses are keen to tap into the huge wealth generated by oil-rich Middle East companies, but are doing so at a local level in the Gulf rather than offering Shariah-compliant products in the UK.