Islam has a set of basic rules and regulations for employer and employee to run their affairs.  Prophet Mohammad (Peace be upon him) practiced and also taught these people during his time.  He founded a society where employer and employee enjoyed benefits of these basic rules.  1400 after years from his death, these basic rules still exists as milestone not only in Muslim nation but also adopted by many other nations and organizations.

Islamic rules and regulations for employer and employee falls in four category.

a. Common rules and regulations for both employer and employee
b. Specific rules and regulations for employer
c. Specific rules and regulations for employee
d. Arbitration

1. Common rules and regulations for both employer and employee:

1.1 Justice and Fair Dealing:
Peace and prosperity is not possible in any organization if there is no justice and fair dealing between employer and employee.  Employer needs to ensure justice by fulfilling his obligations to the employee and employee needs to ensure justice by fulfilling his obligations to employer

Allah said:
“ O YOU WHO BELIEVE STAND FIRMLY FOR JUSTICE”
(Quran : Surah 4 Verse 135)

Prophet Mohammed (Peace  be upon him) said:
“ One who exercise his authority and power unjust way will not enter Paradise”
(Ahmed , Ibn Majah, Tirmidi)

1.2  Employment Contract:
Employment contract between employer and employee must be made and agreed by both
Party before starting the job. Details of salary and  duty shall be clearly stated in the contract.

Prophet Mohammed (Peace be upon him) said:
“Employer must declare the wages to worker before the worker embark on the required work”
(Baihaqi)

Once the contract is signed, it is the duty of both employer and employee to respect contractual
terms.

Allah Said:

“O YOU WHO BELIEVE FULFILL YOUR CONTRACT” (Quran : Surah 5 Verse.1)
“FULFILL YOUR AGREEMENT, SURELY, YOU WILL BE QUESTIONED ABOUT IT”
(Quran : Surah 17, verse 34)

Prophet Mohammed (Peace be up on him) said:
“Muslim must abide by their agreement” (Al Tirmidi)

1.3 CONSULTATION:
Employer and employee should sit together time to time to discuss and exchange ideas for
business growth and also to solve if there is any problem between both party.

Allah Said:
“AND THEIR BUSINESS IS CONDUCTED THROUGH CONSULTATION”
(Quran: Surah 42, Verse 38)
THE BELIEVERS ARE NOTHING ELSE THAN BROTHERS. SO MAKE RE-CONCILIATION BETWEEN YOUR BROTHERS AND FEAR ALLAH, THAT YOU MAY RECEIVE MERCY”
(Quran: Surah 49 Verse 10)

1.4 SECURITY:
Employer must protect employee from hunger by giving his wages and providing security of job
and employee must provide business security of his employer by saving from losses.

Allah Said:
“ LET THEM ADORE THE LORD OF HIS HOUSE WHO PRIVIDES THEM FOOD AGAINST HUNGER
AND SECURITY AGAINST FEAR (DANGER)”
(Quran Surah 106, verses 3&4)

1.5 HONESTY:
Employer and employee both must be honest to each other.  Cheating and deception from both
sides are not allowed in Islam.  Employee should not cheat at work and work less while he takes
full salary.  On the other hand employer should not cheat in paying less while employee work in
full.

Allah Said:
“ WOE TO THOSE THAT DEAL IN FRAUD, THOSE WHO WHEN THEY HAVE TO RECEIVE BY MEASURE FROM MEN, EXACT FULL MEASURE.  BUT WHEN THEY HAVE TO GIVE BY MEASURE OR WEIGHT TO MEN GIVE LESS THAN DUE”
(Quran: Surah 83, Verses 1 to 7)

Prophet Mohammed (Peace be upon him) Said
“ Whoever cheats us is not of us”
(Muslim, Tirmide, Abudawood)

2. SPECIFIC RULES AND REGULATION FOR EMPLOYER:

2.1 Give wages of employee at agreed time:
Remember delay may cause difficulty to the employee, may be he will not have money to buy food and other basic necessities.

Prophet Mohammed (Peace be upon him) Said:
“ Give the wages of employee before his sweat dry”
(Ibn Majah, Hadith no. 2468)

2.2 Wages should be in right amount:
Employer should pay the right amount as agreed. Unlawful deduction is not permissible in Islamic religion.

Allah Said:
“ DO NOT WITHHOLD FROM THE PEOPLE THE THINGS THAT ARE THEIR DUE”
(Quran: Surah 7: Verse 85)

Prophet Mohammed (Peace be upon him)  said:
“ I am the adversary of a man who employs a worker but does not pay him rightful wages”
(Bukhari, Hadith No. 2114)

2.3 Work Load:
Do not give employee workload more than his ability.  If work load is heavy help him.

Prophet Mohammed (Peace be upon him)  said:
“ Do not give them workload more than their ability.  If workload is heavy help them”
“People work under you also Human being like you do not throw them into misery and suffering”
(Targib & Tarhib, Ibn Habban)

2.4  WORK PLACE
Safe work place, food, drink and uniforms at the time of work must be provided,

Prophet Mohammed said :
“ Food Drinks and Cloths are the right of people working under you”
(Ibn Habban)

2.5 Make the Work Easy:
Make the work easy for the employee, provide training, tools and equipments as needed.

Prophet Mohammed (Peace be upon him)   Said:
“ The more you make work easy  for your employee, the more you will be rewarded by Allah”
(Targib & Tarhib)

This reward is not only in life after death.  One can see this reward in the form of better performance and  more profit in this world also.

2.6 Behavior:
Behave well with your employee

Prophet  Mohammed (Peace be upon him)  Said:
“One of the actions that will be beneficial in your life after death is your good behavior with people working under you”
(Ahmed, Ibn Majah, Trimidi)

2.7 Employee’s Welfare:
General welfare of the employee is a moral responsibility of employer.

Allah Said:
“DO GOOD TO THOSE WHOM YOUR RIGHT HAND POSSESS (WORKER)”
(Quran: Surah 4, Verse: 37)

Among good deeds education and health care are most important.  The employee who does not have money to send children to school and the employee who does not have money for medical treatment deserve your support,  even though it is not in the employment contract.  Islam made education  obligatory for all rich and poor.  It is the duty of rich people to facilitate education for poor people.

Prophet Mohammed (Peace be up on him) Said:
“Seeking knowledge is obligatory for all Muslim men and women” (Ibn Majah)

Health care is another very important subject the employee  who is working  so hard for you, come up with help if if cannot support self and family medical need, it is your duty to stand beside him.

Prophet Mohammed (Peace be upon him) Said:
“ Verily Allah, the exalted and Glorious would on the day of resurrection ask: O son of Adam, I was sick but you did not take care of me.  He would say: O my lord, how could I take care thee whereas thou art of the worlds? There up he would say : did not you know that such and such servant of mine was sick but did  you not take care of him (pray for his cure, show kindness and help him) and were you not aware of this that if you had cared him, you would have found me by him.
(Collected by Imam Muslim)

2.8 Respect, dignity and kindness to the employee:

It is the duty of employer to ensure through his managers, supervisors, the respect and dignity of employees irrespective of their position.  Allah has glorified shepherds, farmers, carpenters, blacksmiths by choosing his prophets from them.  Prophet Adam was farmer, Prophet Noah was carpenter, Prophet Daud was blacksmith, Prophet Musa was shepherd.

Prophet Mohammed (peace upon him) said:
“ I worked as shepherd for small wages”

So it is the responsibility of employer to make sure his employees at lower level is not mistreated.

Prophet Mohammed (Peace be upon him) said :
“One who mistreat those under him wll not enter Paradise”
(Tirmidi)

3.0 SPECIFIC RULES AND REGULATION FOR EMPLOYEE

Working as an employee is one of the respectful means of earning livelihood.  Islam considers “Work” as “ Worship”.  A workman is benefitted for his work is this world and after life.  It is our duty to go out and engage in work for earning livelihood.

Allah Said:
“ THEN WHEN THE PRAYER IS ENDED, YOU MAY DESPERSE THROUGH THE LAND AND SEEK THE BOUNTY OF ALLAH (BY WORKING) AND REMEMBER ALLAH MUCH, THAT YOU MAY BE SUCCESSFUL”
(Quran: Surah 62, Verse 10)

Prophet Mohammed (Peace be upon him) said:
“ Best earning is what is earned by the labor of hand with sincerity”
( Ahmed, Hadith No. 83 93)

While working under an employer the following obligations to employer need due attention:

3.1 Employee is required to do his job in best possible manner and to the best perfection for the welfare of his employer

Prophet Mohammed (peace be up on him ) said:
“ Allah likes a worker to be perfect in his work”  He also said “ “ The employee who performs his duty to his employer and Allah in right manner, Allah will give him double reward.”
(Baihaqi, Hadith No. 5312 & Bukari, Hadith No. 4710)

3.2 Employee should be loyal to employer and work for the welfare of the employer.

Prophet Mohammed (Peace be up on him) said:
“ When an employee looks to the welfare of his employer  and worship   Allah, he has two rewards for him”
(Muslim: book 15, chapter 11, No.4097)

3.3 Employee needs to fulfill obligations to his employer.

Prophet Mohammed (Peace be up on him) said:
“ When an employee fulfills obligations of Allah and obligations of his employer he has two rewards for him”
(Muslim, books 15, chapter 11, No.4100)

3.4 Employee must not neglect his work nor harm employer whether he sees or not.  He should work sincerely and take care of property of the employer.

Allah said:
“ DO DEEDS! ALLAH WILL SEE YOUR DEEDS AND (SO WILL) HIS MESSANGER AND THE BELEIVERS. AND YOU WILL BE BROUGHT BACK TO THE “ALL KNOWER” OF UNSEEN AND THE SEEN.  THEN HE WILL INFORM WHAT YOU USED TO DO”
(Quran: Surah 9: Verse 105)

3.5 Employee needs to maintain work place safe, clean and hygienic.
Prophet Mohammed (peace be up on him) said:

“Cleanliness is half of the faith (Iman)”
(Muslim, Book2, chapter 1 No, 0432)

3.6 Employee should take up his job in  the spirit of worship for the satisfaction of Allah.  In fact this is the Islamic motivating force which leads to success of organizations and individuals as well.

Prophet Mohammed (peace be upon him) said:
“The worker if employed and takes what is right and gives what is right is like a “Mujahid” (who struggles in the cause of Allah) till he returns home”
(At Tabarani)

4.ARBITRATION:

Allah All-knower” know that inspite of everything is clear about the obligations of employer and employee, human error might occur.  In this situation people sometime fails to resolve dispute among themselves.  For this situation  “Allah” made system of Arbitration. “Judiciary system” needs to be in place to resolve any unresolved issues between “ employer and employee” God fearing impartial judges shall be appointed to judge both party and give verdict.  Judgment should be honest and impartial; no matter rich or poor, employer or employee, General Manager or a cleaner.  Any attempt to influence Judge is unlawful.  Few references on above are as follows:

Allah Said:

“AND IF TWO GROUPS OF BELEIVERS FALL TO FIGHTING THEN MAKE PEACE BETWEEN THEM”
(Quran: surah 49 Verse 9)

Allah said
“ AND SO JUDGE AMONG THEM BY WHAT ALLAH HAS REVEALED AND FOLLOW NOT THEIR VAIN DESIRES”
(Quran: Surah 5 Verse 49)

Allah Said:
“AND EAT UP NOT ONE ANOTHER’S PROPERTY UNJUSTLY, NOR APPROACH AND INFLUENCE THE JUDGE THAT YOU MAY KNOWINGLY EAT UP A PART OF THE PROPERTY OF OTHERS SINFULLY”
(Quran: Surah 2, Verse 188)

Prophet Mohammed (Peace be upon him) said:
“The people before you were destroyed because they used to inflict the legal punishment on the poor and forgive the rich”
(Albhukari, Volume 8, book 88 No.778)

Allah Said:
“ O YOU WHO BELLIEVE! STAND OUT FIRMLY FOR JUSTICE, AS WITNESS TO ALLAH, EVEN THOUGH IT BE AGAINST YOURSELVES, OR YOUR PARENTS, OR YOUR KINS, BE HE RICH OR POOR, ALLAH IS A BETTER PROTECTOR TO BOTH (THAN YOU) SO FOLLOW NOT THE LUSTS (OF YOUR HEARTS), LEST YOU AVOID JUSTICE, AND IF YOU DISTORT YOUR WITNESS OR REFUSE TO GIVE IT VERILY.  ALLAH IS EVER WELL-ACQUAINTED WITH WHAT YOU DO”
(Quran : Surah 4, Verse 135)

Conclusion:
Islamic principles stated above are balanced way to ensure welfare of both employee and employer on the basis of Justice.  Employer’s money and employee’s labour both together bring lot of benefits for many people also.  Let us take an example of a Food Industry.  Employer invest money to make Food Industry, workers get salary and people get food.  Everybody is benefitted.  Setting up Industry is a welfare job, thousands of people are saved from hunger by salary from the Industry.  Working in the Factory also Welfare, it helps to get money for self and family.  Ultimately with the help of employer, two hands of employee make something for the people. How great is this! Only needs a pure mind and pure intention, Intention to serve mankind.  If it is so no one is harmed, every one is benefitted.  These benefits are not only for Muslims but for all.  It is the responsibility of the Muslim nation to do  welfare for the entire humanity.

Allah Said:
“ YOU ARE THE GREAT NATION. YOU ARE CREATED FOR THE WELFARE OF MANKIND. YOU ORDER PEOPLE TO DO THE RIGHT AND STOP WRONG DOING”
(Quran “ Surah 3, Verse 110)

References:
1. English translation of verses from Holy Quran
2. Action and advises form of Prophet Mohammed( Peace be up on him) from authentic books of Hadith (like Bukhari, Muslim, Ibn Majah, Trimidi, Abu Dawood, Ibn Habban)
3. “ In the early hours” by Khurram Murad
4. “ Questions & Answers on Workers right” by Dr. Muzammal H. Siddique