In a significant development for the United Arab Emirates’ legal approach to cryptocurrency, the Dubai Court of First Instance has issued a ruling, recognizing the payment of salaries in crypto as valid under employment contracts.
This ruling, from case number 1739 of 2024 (Labour), marks a departure from the court’s earlier position in 2023, where a similar claim involving cryptocurrency was rejected.
The case originated from a lawsuit filed by an employee claiming unpaid wages, wrongful termination compensation, and other employment-related benefits. The employee’s contract stipulated a monthly salary in fiat currency, alongside 5,250 EcoWatt tokens, a form of cryptocurrency. The dispute centered around the employer’s failure to pay the EcoWatt token portion of the salary over six months.
In a previous case in 2023 (Judgment No. 6947 of 2023), the court had acknowledged the inclusion of cryptocurrency in an employment contract but refused to enforce the payment. The refusal was due to the employee’s inability to provide a precise valuation of the cryptocurrency in fiat terms, reflecting a cautious stance towards unconventional payment methods.
However, the 2024 ruling indicates a shift. The court has now recognized and enforced the payment of cryptocurrency as stipulated in the contract, without requiring its conversion to fiat currency. Irina Heaver, a partner at the UAE law firm NeosLegal, called this decision a “progressive approach” that reflects the evolving nature of financial transactions within the Web3 economy.
Heaver noted that the court’s reliance on the UAE Civil Transactions Law and Federal Decree-Law No. 33 of 2021 in both the 2023 and 2024 cases shows a consistent application of legal principles in determining wages. She emphasized that this ruling sets a positive precedent for the further integration of digital currencies in everyday financial transactions.
“This decision affirms that if an employment contract includes such terms, both the company and the employee must honor them,” Heaver said. “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.”
The latest development comes amid Dubai growing out to be a prominent crypto hub. As per reports released in April 2024, the average daily number of crypto traders in the UAE region surpassed 500,000 in February, marking a 51% year-on-year rise.
In March, the Dubai International Financial Centre (DIFC), among the largest financial hubs in the Middle East, Africa, and South Asia region, announced the enactment of its Digital Assets Law. The law changes previous contracts, obligations, securities, insolvency, damages, and personal property laws, amending them to account for the existence of digital assets.
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