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Commission On Referrals

Question

Sometimes, an accountant refers work to other companies because, he is too busy. He gets paid ( a percentage or however agreed) for such a referral.  But the actual work only gets done much later. Does this fall under ” selling before taking possession “.

 Here, there are two situations. The first is where the customer knows that he is being referred to another company and he knows that i (accountant) am being compensated by that company for referring him to them. Such compensation at times is calculated at a percentage of the work or a flat rate. However, the company already pays me my money even before they attend to the work of the customer? Is that Correct? 

 

The second situation, is where, there are no agreements between myself and other people/ companies. I simply refer the person to others. The person doesn’t know that I am going to get a commission for this referral nor do I know, nor do I even expect it. There were no agreements prior to this. Then, after the referral, the company or the person to whom such work was given, pays me a percentage.  Here too, it is well before the actual work gets done.

Answer

The scenario where a person is compensated (with a commission) for referring a person to a certain company does not fall under the category of a sale, hence the Shari’ee principle and ruling in regards to ‘selling before taking possession’ is not applicable in this instance.

The referral agent is simply being compensated for referring the client, hence there is no problem if the agent is compensated even before any work is carried out by the accounting company, as the task of referring the client to the company has already been accomplished by the agent. However, the commission amount must be fixed and stipulated even before the client is referred to the company, and the agent should be well aware of the amount that he is to receive for referring the said client. It cannot be left ambiguous or dependent later on the amount of work that will be carried out; else the transaction will fall in the category of Ijaarah-e-Faasida. This is applicable to scenario number one.

As for scenario number two, since there is no agreement between the two parties, nor is a commission expected, the funds received by the individual that referred the client will be considered as a ‘gift.’ Since this is a voluntary act from the side of the company, the amount is left totally to the discretion of the donor.

Checked and Approved By:

Mufti Muhammed Saeed Motara Saheb D.B.

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