Question
Can I contribute to the Employee Investment Program that the company I work for offers?
Salamu Alaikum. My company offers a program where I can invest money into the company and receive a guaranteed return of at least 10%, with the possibility of earning more depending on the company’s performance. Earnings are calculated monthly based on the principal amount and are not compounded. From my understanding, simple investing and profit-sharing are permissible, but since there is a guaranteed return regardless of performance, are the earnings considered riba?
Answer:
Firstly: The ruling on investing with guaranteed returns
It is not permissible to invest in a program that offers a guaranteed return, regardless of the company’s financial performance. A contract of this kind does not represent genuine investment according to Islamic principles. Rather, it takes the form of an interest-bearing loan, whereby you lend money to the company and receive a fixed profit in return—this is the essence of riba, which is categorically forbidden in Islam.
The Prophet ﷺ said:
“Every loan that brings a benefit is riba.”
(Narrated by al-Bayhaqi; classed as hasan by many scholars)
This applies whether the return is 5%, 10%, or any fixed rate. Once the return is guaranteed, it no longer qualifies as profit-sharing or risk-bearing investment. Instead, it becomes a transaction based on predetermined gain on capital, which is exactly what Islam prohibits in financial dealings.
Secondly: The difference between halal investment and riba-based returns
In Islamic finance, lawful investment must involve shared risk. This is the foundation of contracts like mudarabah (profit-sharing) or musharakah (joint partnership). In these models, the investor may profit or lose, depending on how the business performs. Profit is distributed based on pre-agreed ratios, but not guaranteed. The capital is exposed to loss, and neither the principal nor any return can be fixed in advance.
Guaranteeing the capital or offering a minimum return—regardless of performance—makes the transaction invalid from a Shar‘i perspective. Even if the label used is “investment,” what matters is the substance of the contract, not the name given to it.
Conclusion:
It is not permissible to contribute to the Employee Investment Program described, because the guaranteed return makes it a riba-based transaction. Any scheme that promises a fixed percentage of profit, regardless of actual business performance, is not compliant with Islamic principles. Lawful investment in Islam requires exposure to risk and prohibits any contract that assures profit without the possibility of loss.
And Allah knows best.