What Is the Ruling on Pitching Phone Warranties and Late Payment Fees When Working at a Telecom Company?

Question:

What Is the Ruling on Pitching Phone Warranties and Late Payment Fees When Working at a Telecom Company?

Question
If someone works at a phone company (such as Telus) and is required to pitch warranties on the phones they sell, what is the ruling on that? Also, what is the ruling on late payment fees in the phone contract?

Answer
Alhamdulillah, wassalatu wassalamu ala rasulillah, wa ala alihi wa sahbihi ajmain.

This issue must be addressed with clear distinctions, because the rulings differ based on who provides the warranty, the employee’s role, and the nature of late payment penalties.

1. The Shar‘i Context

Islamic rulings on contracts and income depend on:

• The substance of the contract
• Whether the transaction involves riba, gharar, or injustice
• Whether the individual is directly engaging in the prohibited element or is incidentally involved due to employment in a non-Muslim system

2. Ruling on Phone Warranties

There is a critical distinction that must be made:

• In-house warranties (provided directly by the seller of the product) are permissible.
  Example: A phone company or retailer offering its own warranty for repair or replacement.

This is treated as a service contract, not insurance, because:

• The seller is guaranteeing their own product
• There is no third-party risk transfer
• The liability remains with the seller
• Third-party warranties (offered by an external company not selling the product) are not permissible to purchase, because they resemble commercial insurance, which involves gharar and impermissible risk transfer.

For the employee:
If the employee is required to pitch an in-house warranty, this is permissible, as the contract itself is halal.

If the warranty is third-party, the contract is problematic, but the employee is still not the contracting party. The responsibility lies with the company structure, not the salesperson, especially when refusal would cause hardship or job loss.

3. Ruling on Late Payment Fees

Late payment fees are problematic in principle because:

• They are imposed due to delay in payment
• They resemble riba al jahiliyyah when they are punitive rather than actual administrative costs

However, the ruling differs based on the employee’s involvement.

• The contract itself is generally considered valid, even if it contains a penalty clause, because such clauses are standard and unavoidable in most non-Muslim countries.
• The employee does not draft, impose, or benefit directly from the penalty clause.
• If the employee were to collect or take money specifically designated as late fees, that would not be permissible.

In normal telecom employment, the employee’s income is not tied to late fees, and therefore they are not sinful for selling or explaining the contract.

4. Relevant Usul Principles

يغتفر في التابع ما لا يغتفر في المتبوع
What is tolerated incidentally is not tolerated when it is primary.

he is not an insurance agent; it’s a merely small part of his job and not the primary

الحاجة العامة تنزل منزلة الضرورة
A widespread need is treated like a necessity, The scholars stated that in cases of widespread difficulty, the income remains lawful with purification.

إذا تعذر الحلال الخالص سقط الإثم وبقي التطهير
When pure halal cannot be fully achieved, sin is lifted and purification remains, and give a portion of income in charity, without intending reward, but as cleansing of doubtful earnings

In this case, giving 5% of one’s salary to charity fulfills this purification and removes the concern of mixed income.

Final Ruling

• Pitching in-house warranties offered by the phone company itself is permissible.
• Pitching third-party warranties is problematic, but the employee is not sinful if required as part of employment.
• Late payment fees are not permissible in principle, but responsibility lies with the contract structure, not the employee, as long as the employee does not collect or benefit directly from them.
• Due to widespread necessity, this situation is classified as shubha, and the income is lawful with purification.
• Giving 5% of one’s salary to charity purifies the income and removes the doubt.

And Allah knows best.