FAQ #171: Is it haram to break a scholarship agreement?

Original Question: Is it permissible to break a scholarship agreement, due to low pay/poor working conditions, incurring pro-rated liquidated damages that include compounded interest? The company sponsored my studies but the salary/working conditions was not revealed to me until just before joining and are projected to remain poor. While I can afford necessities Alhamdulillah, it is delaying me from looking for higher earning jobs with a better WLB that would enable me to support a family (i.e., delaying me from marriage). As such, is it okay to leave midway through the bond (assuming 4 years)? JazakAllah khair.

Answer:

Islam places great importance on honoring covenants and agreements, making it a fundamental aspect of ethical conduct. It has been strongly emphasized on the obligation to fulfill these commitments, as breaking them is considered a breach of trust and integrity. In Islam, fulfilling an agreement is seen as a reflection of a Muslim’s honesty, accountability, and respect for others.

Allah SWT has clearly stipulated in the Quran, Surah Al-Isra’ verse 34:

أَوْفُوا بِالْعَهْدِ إِنَّ الْعَهْدَ كَانَ مَسْئُولاً

“Honour your pledges, for you will surely be accountable for them”

The verse highlighted that Allah SWT will hold individuals accountable for the fulfillment of their agreements and question those who break or cancel them. Every breach of trust will be examined, and those who fail to uphold their promises will face the consequences of their actions in the Hereafter.

Likewise, the Prophet SAW said:

الْمُسْلِمُونَ عَلَى شُرُوطِهِمْ إِلَّا شَرْطًا حَرَّمَ حَلَالًا أَوْ أَحَلَّ حَرَامًا

“Muslims must abide by the conditions they have agreed upon, except a condition that makes the lawful unlawful or makes the unlawful lawful” (Jami at-Trimidhi 1352)

These texts demonstrate the general principle that agreements should be fulfilled and not terminated without valid reason.

Referring back to the question, IFSG recognizes the significant challenges faced by the individual asking this question, particularly the concern that the salary and working conditions were not fully disclosed until shortly before joining. This is an important consideration, as Islamic law generally requires material contractual terms, especially remuneration, to be reasonably clear and known to the contracting parties. The Prophet SAW said:

إِذَا اسْتَأْجَرْتَ أَجِيرًا فَأَعْلِمْهُ أَجْرَهُ‏.‏‏

“When you hire a worker, tell him what his wages will be.” (Sunan an-Nasai 3857)

Classical jurists similarly stipulated that compensation should be clearly specified. Imam al-Nawawi mentioned in “Raudhatul Tolibin” that ambiguity regarding remuneration may affect the arrangement and, where work has already been performed, the worker may be entitled to a fair market wage (ujrah al-mithl). accordingly , salary expectations and significant employment conditions should ordinarily be communicated before one commits to a long-term employment obligation.

At the same time, a scholarship bond is generally a binding arrangement, especially when the sponsoring organisation funds a student’s education on the condition that the student serves the organisation for a specified period thereafter. Since the sponsor has fulfilled its commitment by funding the studies, the recipient should endeavour to honour the agreed service period where reasonably possible.

In light of these circumstances, IFSG can offer the following recommendations:

Negotiating with the Employer

We advise the individual to open a dialogue with their employer regarding salary revision, career growth opportunities and career conditions. Since the remuneration and employment conditions appear to differ from expectations, it would be reasonable to seek clarification and explore whether adjustments can be made. This may include a fair market salary (ujrah al-mithl) or alternative arrangements that address the concerns raised. Additionally, it is recommended if the person can come to terms with the employer for proposing alternative solutions or options that the company could offer to address these concerns.

Reviewing the Scholarship Agreement

The scholarship agreement should be reviewed carefully, paying particular attention to any clauses relating to termination, repayment obligations and liquidated damages. If the agreement expressly allows early termination upon repayment of specified amounts, then exercising that option would generally be permissible, provided the agreed obligations are fulfilled.

If No Termination Clause Exists

If the scholarship agreement does not include a termination clause or if the terms are unclear, the individual should not unilaterally terminate the agreement. Instead, they should engage the relevant stakeholders, such as the management or human resources, and seek a mutually acceptable resolution. Employment bonds are not intended to permanently bind a person regardless of circumstances, but any exit should be pursued through proper channels and in a manner that respects the rights of all parties.

Ultimately, the permissibility of breaching the scholarship and employment agreement depends on the specific terms of the agreement and the manner in which the exit is carried out. If the agreement includes a clear clause that allows for termination with the payment of a penalty, then breaching the contract is permissible, both from a legal and Shariah perspective, provided the penalty is paid as agreed. However, deliberately avoiding payment or neglecting this obligation would be impermissible.

The desire to pursue better income, healthier working conditions and the ability to support a family and pursue marriage are legitimate considerations recognised in Islam. Therefore, leaving the bond may be permissible in principle, especially where material employment terms were not adequately disclosed. However, the individual remains responsible for honouring any legitimate contractual obligations arising from the agreement.

In conclusion, IFSG advises the individual to first explore negotiations with the employer, carefully review the bond terms and seek a fair settlement where necessary. IFSG hopes that this response provides useful guidance and assists the individual in making an informed and conscientious decision moving forward.

Allah Knows The Best.

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