Dubai Recognizes Crypto as Legal Salary Payment
16 Aug, 2024 ● Vijesti o kovanicama
In a notable development in the United Arab Emirates' legal approach to cryptocurrency, the Dubai Court of First Instance has validated salary payments in crypto under employment contracts.
Irina Heaver, a partner at UAE law firm NeosLegal, highlighted that the ruling in case number 1739 of 2024 indicates a shift from the court’s earlier position in 2023, where a similar claim was rejected due to the lack of precise valuation of the involved cryptocurrency.
Heaver sees this as a sign of a “progressive approach” towards incorporating digital currencies into the country’s legal and economic systems.
The case involved an employee who sued the employer for unpaid wages, wrongful termination compensation, and other benefits.
The employment contract specified a monthly salary in fiat currency and 5,250 EcoWatt tokens.
The conflict arose because the employer failed to pay the token portion of the salary for six months.
In 2023, the court recognized the inclusion of EcoWatts tokens in the contract but did not enforce payment in crypto, as the employee did not provide a clear method to value the tokens in fiat terms.
“This decision reflected a traditional viewpoint, emphasizing the need for concrete evidence when dealing with unconventional payment forms,” Heaver noted.
However, in 2024, the court “took a step forward,” ruling in favor of the employee and mandating the payment of the crypto salary as outlined in the employment contract without converting it to fiat.
Heaver stated:
“This decision reflects a broader acceptance of cryptocurrency in employment contracts and highlights the court’s recognition of the evolving nature of financial transactions within the Web3 economy.”
She also mentioned that the court's reliance on the UAE Civil Transactions Law and Federal Decree-Law No. 33 of 2021 in both rulings demonstrates the consistent application of legal principles in wage determination.
According to Heaver, this decision sets a positive precedent, encouraging further integration of digital currencies into everyday financial transactions and fostering a more inclusive and innovative business environment.
Heaver added:
“This ruling affirms that if an employment contract includes such terms, both the company and the employee must honor them. It is reassuring to see the court recognize that wages, whether paid in fiat or cryptocurrency, are the rightful entitlement of the employee for their agreed-upon work.”
She also emphasized that this is a victory for employees and a significant step forward in the UAE’s journey toward becoming a leader in the digital economy.
Sources:
https://cointelegraph.com/news/dubai-court-recognizes-crypto-salary-payments
