Technology Retainer Fees: Shariah Compliant?

Technology Retainer Fees: Shariah Compliant?

Question:

ASSALAAMU ALAIKUM

 

MUFTI SAHEB

 

We provide computer related services viz graphic designing etc

At times we offer to our client a retainer 

A retainer agreement would mean that we  offer 10 hours(in the month) of service to the client   over and above the agreed upon  service at a price eg 5000

So the client can use any 10 hours of our service beyond the agreed upon

 

The reason this occurs is because at times the client would need some urgent issues to be resolved after his work is done so we sort of give him a discounted hour package and save ourselves from undue difficulty if the emergency work stretches for a long time

But at times the client wouldn't even use these hours despite paying for it because he didnt have a need

 

So would such an agreement(retainer agreement) be shariah compliant ?

Answer:

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

Answer:

In the Name of Allah, the Most Gracious, the Most Merciful.

As-salāmu ‘alaykum wa-rahmatullāhi wa-barakātuh.

Your question dated 12 June 2025 refers.

We would like to applaud you for your zeal and enthusiasm in ensuring that your financial dealings are shariah compliant.

Contextual Background: Retainer Agreements

A Retainer Agreement, also known as a retainer contract or business retainer agreement, is a formal document that outlines the terms of an ongoing relationship between a service provider and a client. It is commonly used in various professional fields, including legal, consulting, marketing, and IT services. The primary purpose of a Retainer Agreement is to secure the availability of the service provider for a specified period, ensuring that the client has access to their expertise when needed.

A retainer fee is an advance payment that a client makes to a professional, and it is considered a down payment on the future services rendered by that professional. Regardless of occupation, the retainer fee funds the initial expenses of the working relationship. For this reason, these fees usually remain separate from the hourly wages of the consultant, freelancer, or lawyer. This ensures that money is not used for personal purposes before fully performing services.[1]

There are various forms of retainer agreements including:

1. Pay for Work/Special Retainer

This is a one-time fee for a specific task or professional service. Once the task is completed, the professional’s obligation under the retainer ends.

2. Pay For Access/General Retainer

This is a flat fee paid to retain the professional’s availability for a specific period. It doesn’t necessarily cover any particular service but ensures the professional is available for consultation and general professional advice.

3. Security Retainer

This common type of retainer is deposited into a trust account. As the attorney works on your case, they withdraw funds from this account. If the funds deplete, the client would need to replenish the retainer.

4. Advance fee Subscription

Similar to a security retainer, this fee is paid in advance and used to cover future professional services. However, any unused portion of this retainer is refundable to the client

Key Corporeal Structural Retainer Considerations

The underlying legal and corporeal structure of retainer agreements generally consist of the following key fundamental elements:

1. Scope of Work
2. Payment Terms
3. Confidentiality Clauses
4. Performance Standards
5. Dispute Resolution
6. Governing Law

Shariah Compliant Service Contracts (Ijarah)

‘Ijarah’ is an Arabic word for ‘lease’, ‘rent’ or ‘wage’. The Fuqahaa (Jurists) have defined Ijarah “as the transferral of the usufruct of specific assets or provision of services to the client for a fixed tenure in lieu of a fixed fee or remuneration.

Under the conceptual framework of an Ijarah, the usufruct of the leased asset is transferred to the client and not actual ownership (Milkiyyah) of the asset (Ayn Ma’joor Alayhi). Ownership (Milkiyyah) is generally transferred under a valid Bay Sahih.

There are two broad categories of Ijarah:

• Ijarah al-manafi/al-A’yaan

• Ijarah al-A’maal/Ashkhaas

Ijarah al-Manafi:  ‘Manafi’ is an Arabic word meaning ‘benefit/usufruct’. Ijara al-manafi is a lease contract in which the benefits or usufruct of an asset are transferred to the client in exchange for a fixed fee. For example, Nakheel Property Investments leases out 100 apartments in exchange for a fixed rent of  R 10,000 per month for a fixed tenure of one year.

Ijara al-A’maal: Ijara al-A’maal refers to a lease contract to engage the services of a person for a fixed remuneration over a specific tenure. For example, Zaid hires Bakr to carry his luggage to the airport. In an Ijara al-A’maal, the ‘ajir’, or labourer, provides his services to the ‘mustajir’, or employer. The ‘ujra’ is the wage or rental fee.[2]

The Fuqahaa have further defined Ijara al-A’maal under the following juridical categorization:

1. Ajir Mushtarak – An Ajir Mushtarak refers to a functional project based employee who provides functional project based services in exchange for a fixed fee. For example, a software consultant (Ajeer Mushtarak) hired by the project owner (Musta’jir) to develop a specific software based on a fixed functional technical mandate.
2. Ajir Khaas – An Ajir Khaas refers to a mutually exclusive service-based employee receiving a fixed fee in exchange for exclusive time-bound availability of the skills/services of the Ajir Khaas. For example, a CFO hired on a fixed yearly contract by a multi-national corporation for a fixed monthly remuneration package. [3]

Shariah Compliance Analysis of Retainer Agreements

In general, according to Shariah, the general conceptualization of retainer agreements as defined above would generally fall under the classical juridical purview of “Ijarah Mushtarakah” (functional project-based service engagements), as it is generally understood that the retainer fee payment serves as a “downpayment” for specific project based functional services to be provided later by the relevant professional. Moreover, it is also understood that “unearned retainer fees are refundable” in certain jurisdictions such as the USA under the Model Rules of Professional Conduct of the American Bar Association (ABA).  [4]

We are currently conducting a detailed Tahqeeq Shar’ee (Academic research) at our Darul Iftaa related to the various shariah compliance permutations related to the various classifications and denominations related to retainers as espoused above. We will advise the public once we have concluded our academic research findings. Insha’Allah.

Contextual Juridical Analysis

We understand from your question, that you provide certain computer related services such as graphic design for your client for a fixed fee. You also provide a further fixed retainer fee for a fixed number of hours over and above the specific design fee referenced in your question. You also state that the client pays the retainer fee at certain times without utilizing your services.

The retainer service fee referred to you in your question is termed as a “technology service retainer fee”. In essence, the Musta’jir (client) pays the service provider (Ajeer) a fixed recurring subscription fee for certain specified technology and IT services such as managed IT services, cloud services, etc.

The technology service arrangements with your client will be permissible based on the following general shariah compliance conditions:

1. The technology services in reference are permitted in Shariah without any aiding and abetting in sin (I’anah alal Ma’siyah)[5]
2. 51% of the client’s capital and source of income is shariah compliant and Halal[6]
3. The corporeal structure/contractual substance (Ma’na) of the underlying contract (Aqd) with your client is shariah compliant[7]

 

Your question is unclear and ambiguous. We cannot provide a specific Fatwa (juridical ruling) related to the scenario described by you unless we receive the specific details related to the nature of the services provided, terms and conditions of the underlying retainer contract and the structural nature of the underlying agreement with your client.

 

However, in general, we advise you to consider structuring the underlying technology services contract with your client as an “Advance Technology Service Fee Arrangement”. In other words, your client will pay you an advance fee (Ta’jeel)[8] for a fixed (Muta’ayyan) schedule of shariah compliant technology services to be provided by you to your client under the concept of Ijarah Mushtarakah. You will not be eligible (Mustahiqq) to receive such advance fee unless you complete the schedule of services mutually agreed with your client.

 

We advise you to seek the expert guidance of an experience Mufti/Alim to discuss the shariah compliance of your specific contextual scenario in more detail.

 

 

 

And Allah Ta’āla Knows Best

(Mufti) Ismail Desai

Shariah Board and Fatwa Committee,

Darul Iftaa, Durban, South Africa

 

DISCLAIMER: The views and opinions expressed in this answer belong only to the author and do not in any way represent or reflect the views of any organizations to which he may be affiliated with. The opinions and educational information proffered in this communication are based on the jurisprudential understanding and available knowledge of the author. Given that contemporary issues and interpretations of contemporary issues are subjective in nature, another scholar may reach different juristic inferences and conclusions to those as expressed by the author. Whilst every effort has been taken to ensure total academic integrity and honesty, the author is open to corrective measures based on sound academics and juristic inferences. The Shari’ah ruling given herein is based specifically on the specific scenario in question.  The author bears no responsibility towards any party that acts or does not act on this answer and is exempted from any and all forms of loss or damage.  This answer may not be used as evidence in any court of law without prior written consent from the author.  Any or all links provided in our emails, answers and articles are restricted to the specific material being cited. Such referencing should not be taken as an endorsement of other contents of that website.

 

 

and Allah Ta'ala Knows Best

Mufti Ismail Desai
Darul Iftaa
Durban, South Africa

An

Disclaimer The views and opinions expressed in this answer belong only to the author and do not in any way represent or reflect the views of any organizations to which he may be affiliated with. The opinions and educational information proffered in this communication are based on the jurisprudential understanding and available knowledge of the author. Given that contemporary issues and interpretations of contemporary issues are subjective in nature, another scholar may reach different juristic inferences and conclusions to those as expressed by the author. Whilst every effort has been taken to ensure total academic integrity and honesty, the author is open to corrective measures based on sound academics and juristic inferences. The Shari’ah ruling given herein is based specifically on the specific scenario in question. The author bears no responsibility towards any party that acts or does not act on this answer and is exempted from any and all forms of loss or damage. This answer may not be used as evidence in any court of law without prior written consent from the author. Any or all links provided in our emails, answers and articles are restricted to the specific material being cited. Such referencing should not be taken as an endorsement of other contents of that website.

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