Ruling on using expense allowances for purposes other than those for which they were allocated
Question

                I work for a public agency for which the state has allocated – like other government departments – a budget to cover employees’ travel expenses having to do with work for the agency. But the manager of this agency thinks that it is better to use these funds for the purpose of rewarding employees according to their general performance, without paying any attention to their travel. Based on that, he has divided the employees into groups, and each group is given a certain amount. Is it permissible for us, from a shar‘i point of view, to take these allowances in this way? May Allah grant you the best of rewards, and give us and you the joy of gazing upon His noble Countenance.
Praise be to Allah.
      If the manager of the agency has the authority – as granted 
      to him by the administration – to dispose of these travel allowances in 
      whatever manner he thinks is most appropriate, such as giving them as 
      rewards and incentives to those who deserve that, so as to create an 
      atmosphere of competition at work and raise performance levels in order to 
      increase productivity, there is nothing wrong with that, and there is also 
      nothing wrong with the employee who deserves that taking the money and 
      benefiting from it, because the manager is in charge of running the 
      agency’s work and taking care of the workers’ affairs. 

    But if the manager is going against the rules and regulations 
    of the agency, especially if it is a public agency or a government 
    department, and he does not have the right or authority to dispose of travel 
    allowances in this manner, then it is not permissible for him to do that; 
    rather any conduct that is not in accordance with the rules and regulations 
    is a transgression against public wealth and the sin of doing that is 
    greater than the sin of doing that with private money, because it affects 
    the welfare of society and undermines people’s rights, which are undoubtedly 
    greater than individual rights, although each has its own sanctity. This 
    requires the employees to be honest and to refer the matter to their 
    manager’s superiors, if necessary. 

    It was narrated that Khawlah al-Ansaariyyah (may Allah be 
    pleased with her) said: I heard the Prophet (blessings and peace of Allah be 
    upon him) say: “There are some men who dispose of the wealth of Allah 
    unlawfully; theirs will be the Fire on the Day of Resurrection.”

    Narrated by al-Bukhaari (3118) 

    Al-Haafiz Ibn Hajar (may Allah have mercy on him) said: 

    That is: disposing of the wealth of the Muslims in an 
    inappropriate manner is more general than merely being unfair when dividing 
    wealth and the like. This is a deterrent to people in authority against 
    taking anything from the wealth in an unlawful manner or withholding it from 
    those who are entitled to it.

    End quote from Fath al-Baari (6/219). 

    al-Qastallaani (may Allah have mercy on him) said: 

    “the wealth of Allah” is that which He has allocated to serve 
    the public interests of the Muslims. Disposing of it unlawfully means not 
    giving it to those who deserve it; rather they give it to those who do not 
    deserve it. “theirs will be the Fire on the Day of Resurrection” – this is a 
    deterrent addressed to people in authority against disposing of the public 
    funds of the Muslims in any unlawful manner.

    End quote from Irshaad as-Saari (5/205) 

    Shaykh Ibn ‘Uthaymeen (may Allah have mercy on him) said: 

    The point is that anyone who disposes of wealth in a manner 
    that is contrary to Islamic teachings on wealth – whether it is his own 
    wealth or that of another – the Fire – Allah forbid – will be his on the Day 
    of Resurrection, unless he repents and restores misappropriated property to 
    its rightful owners, and repents from what he spent his wealth on of haraam 
    things such as smoking, alcohol and the like. Then he will be one of those 
    whose repentance is acceptable to Allah, because Allah, may He be exalted, 
    says (interpretation of the meaning):

    “Say: O 
    ‘Ibaadi (My slaves) who have transgressed against themselves (by committing 
    evil deeds and sins)! Despair not of the Mercy of Allah, verily, Allah 
    forgives all sins. Truly, He is Oft‑Forgiving, Most Merciful.

    ‘And turn in repentance and in obedience with true Faith 
    (Islamic Monotheism) to your Lord and submit to Him, (in Islam), before the 
    torment comes upon you, then you will not be helped.

    ‘And follow 
    the best of that which is sent down to you from your Lord (i.e. this Quran, 
    do what it orders you to do and keep away from what it forbids), before the 
    torment comes on you suddenly while you perceive not!’

    Lest a person should say: ‘Alas, my grief that I was 
    undutiful to Allah (i.e. I have not done what Allah has ordered me to do), 
    and I was indeed among those who mocked (at the truth! i.e. La ilaha 
    ill-Allah (none has the right to be worshipped but Allah), the Quran, and 
    Muhammad (blessings and peace of Allah be upon him) and at the faithful 
    believers, etc.)’

    Or (lest) he should say: ‘If only Allah had guided me, I 
    should indeed have been among the Muttaqoon (pious and righteous persons).’

    Or (lest) he should say when he sees the torment: ‘If only I 
    had another chance (to return to the world) then I should indeed be among 
    the Muhsinoon (good-doers).’

    Yes! Verily, there came to you My Ayat (proofs, evidences, 
    verses, lessons, signs, revelations, etc.) and you denied them, and were 
    proud and were among the disbelievers.”

    [az-Zumar 39:53-59]. 

    In this hadith there is a warning against spending money on 
    that in which there is no benefit, and squandering it in this manner, 
    because Allah has made wealth a means of sustenance for people that they 
    need in order to maintain their religious and worldly well-being. So if a 
    person spends it in a way that serves no interest, he will be regarded as 
    being one of those who squander the wealth of Allah unlawfully. 

    End quote from Sharh Riyadh as-Saaliheen (2/538) 

    And Allah knows best.