Answer
Short Answer: “You should pursue the case to its legal extent and actually take the amount the court assigns to you. But you are only entitled to fair formal salary and fair formal benefits. Anything above that which is awarded to you should be given in charity. Although it is paid by the employer, he does not deserve to have it returned because of his wrong-doing. What he did to you was not permissible, according to what I see based on my understanding of Shari’ah.”
Dear Brother or sister, Assalamu Alaykum wa Rahmatu Allahi wa Barakatuh.
The Core of the Problem: He Violated An Agreement
The principle is: you are entitled to compensation of any actual financial damage he caused you by his arbitrary change of what you agreed on.
This is a general overwhelming principle in Shari’ah in all cases of injury, financial or otherwise.
No one is entitled to profiteer from an injury or from failure of the other party to keep to their contractual obligations.
Accordingly, if you actually lost an offer given to you because the employer formalized your work with him, you can take the difference between the amount this offer would have given you and the actual pay you received from the employer.
This does not seem to be the case as you did not mention such an offer.
Losing an opportunity alone is not recognizable and not exactly estimable.
Pursue the Legal Case, But Only Take What’s Due to You
On the other hand, by formalizing your job, which is in violation of your consensual agreement for which you accepted a reduced wage, this makes you entitled to a normal fair salary and normal benefits during the period you worked with him.
Moreover, you suffered more financial loss after you willingly left your other job, thinking he would keep his end of the deal.
The salary he reported to the tax authority is irrelevant (especially since it is known that all people try to evade taxes as much as they can).
Furthermore, his violation of the agreement and the tax laws make him deserve fines and punishment according to the law.
These last two points make me reach the following conclusion: you should pursue the case to its legal extent and actually take the amount the court assigns to you.
But you are only entitled to fair formal salary and fair formal benefits.
Anything above that which is awarded to you should be given in charity.
Although it is paid by the employer, he does not deserve to have it returned because of his wrong-doing.
What he did to you was not permissible, according to what I see based on my understanding of Shari’ah.
Wa Allahu A’alam, Wassalam
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