In a landmark decision, the Dubai Court of First Instance has recognized salary payments in cryptocurrency as valid under employment contracts, marking a significant shift in the UAE’s judicial approach to digital currencies. This ruling, delivered in case number 1739 of 2024, reflects an evolving stance on the integration of cryptocurrencies into legal and economic frameworks.
Irina Heaver, a partner at UAE law firm NeosLegal, explained that the court’s decision in this case is a notable departure from its earlier position in 2023. In the previous year, a similar claim was rejected due to the lack of precise valuation of the cryptocurrency involved. Heaver described the 2024 ruling as indicative of a “progressive approach” toward incorporating digital currencies into the country’s legal and economic systems.
The case revolved around an employee who sued their employer for unpaid wages, wrongful termination compensation, and other benefits. The employment contract specified a monthly salary in both fiat currency and 5,250 EcoWatt tokens. The dispute arose because the employer had failed to pay the crypto portion of the salary for six months.
In 2023, the court had acknowledged the inclusion of EcoWatt tokens in the contract but declined to enforce payment in cryptocurrency, citing the employee’s failure to provide a clear method for valuing the tokens in fiat terms. This decision was seen as a reflection of traditional viewpoints that emphasized the need for concrete evidence when dealing with unconventional forms of payment.
However, the 2024 ruling marked a significant shift. The court ruled in favor of the employee, ordering the payment of the crypto salary as stipulated in the employment contract, without requiring conversion into fiat currency. Heaver noted that this decision demonstrates a broader acceptance of cryptocurrency in employment agreements and underscores the court’s recognition of the evolving nature of financial transactions within the Web3 economy.
Heaver attributed the court’s decision to the consistent application of legal principles outlined in the UAE Civil Transactions Law and Federal Decree-Law No. 33 of 2021, which were referenced in both judgments. This consistency highlights the judiciary's effort to adapt established legal frameworks to accommodate emerging financial technologies.
The ruling is expected to have far-reaching implications for the adoption of cryptocurrencies in the UAE. Heaver suggests that it sets a positive precedent, encouraging further integration of digital currencies into everyday financial transactions. This development is seen as fostering a more inclusive and innovative business environment.
“This ruling affirms that if an employment contract includes terms related to cryptocurrency, both the company and the employee are obliged to honor them,” Heaver said. “It is reassuring to see the court acknowledge that wages, whether paid in fiat or cryptocurrency, are the rightful entitlement of the employee for their agreed-upon work.”
Heaver concluded that the decision is a significant step forward in the UAE’s journey towards becoming a leader in the digital economy, benefiting both employees and businesses by recognizing the legitimacy of digital currencies in financial agreements.
August 2024, Cryptoniteuae