Question
Are restraint of trade agreements permissible in Islam? A Muslim employer has made his employees sign such agreements restricting them from accepting employment from other companies who conduct the same business as he does. The restriction is for a certain period after the employee leaves employment and within a certain distance of his (employers) business. The restriction would apply to employment in any capacity and not only the capacity one is employed in at this employers business. The employer has further agreed to pay the employees a certain amount of money per month in return of the employees signing the agreement.
Answer
The restraint of trade agreements is haraam. It is in the category of riba. It is not permissible for the employer to impose this haraam contract on the employee nor is it permissible for him to pay the employee for signing nor is it permissible for the employee to accept such haraam riba.
- Source
- themajlis.co.za
- Published in
- The Majlis Vol 24 No 06
- PDF page
- 5
Appears under Questions and Answers (approximate).