Subject : Islamic Ruling on Zakah of the Money of Jordan Cement Factories Co. Ltd Staff Provident Fund

Fatwa Number : 566

Date : 23-03-2010

Classified : Zakat on Money

Fatwa Type : Search Fatawaa

Question :

A staff provident fund was established at the Jordan Cement Factories Co. Ltd. This Fund`s system is based on the following:

First: (10%) is deducted from basic salary and (15%) is paid by the company.

Second: An employee may borrow (50%) of his financial rights in the provident fund after ten years of service (Outstanding advance).

Third: An employee has the right to withdraw his entire balance (Deductions from salary and company payments) after fifteen years of service.

Fourth: An employee`s entire balance (Deductions from salary and company payments) is returned to him upon separation from service.

Fifth: Annual profits shall be divided among staff members at the end of every fiscal year.

Based on the above information, how should staff members who are participants in this fund calculate Zakah due on their money?

The Answer :

All perfect praise be to Allah the Lord of the Worlds. May Allah`s peace and blessings be upon our Prophet Mohammad and upon all his family and companions.

As understood from your question, each employee is a partner in the provident fund. His share equals the deductions from his salary and the payments made by the company. The fund invests the money it has, then divides the profits among the participating members

If this is the case, each employee should give the Zakah due on the total amount of his money (Deductions from salary, payments made by company and annual profits) in the fund for every lunar year, and that is (2.5%). This is of course after the total reaches Nisaab (Minimum amount liable for Zakah) and one full lunar year elapses over its possession. And Allah The Almighty Knows Best.

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