Dubai salary in crypto? Court orders company to pay employee's pay in dirhams, e-currency

This came after the employee filed a case of arbitrary dismissal against the company

Waheed Abbas

Published: Sun 18 Aug 2024, 1:38 PM

Last updated: Sun 18 Aug 2024, 9:21 PM

In a landmark ruling, a Dubai court has ordered a company to pay an employee’s outstanding dues in UAE currency and cryptocurrency as agreed in the contract.

This came after the employee filed a case of arbitrary dismissal against the company.

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The ruling by the Dubai Courts of First Instance was announced in case number 1739 of 2024, marking a significant shift and progressive approach as the financial transactions industry evolves constantly.

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The employee’s contract specified monthly salary to be paid in UAE dirhams and Ecowatt Tokens, which is a form of cryptocurrency. After the arbitrary dismissal case was ruled in favour of the employee, the court ordered the company to pay the employee her wage in Ecowatt Token as well.

Mahmoud Abuwasel, managing partner, Wasel and Wasel, said the dispute was centred around employers’ failure to pay the 5,250 EcoWatt token portion of the salary for six months and allegedly the wrongful termination of the employee.

“Dubai Courts have made a landmark ruling that salaries paid in cryptocurrency are legally valid as they show a significant change in the legal and economic landscape of the UAE. The 2024 decision underscores the principle that wages are a fundamental right of the employee, rooted in the agreed-upon work and enshrined in Article 912 of the Civil Transactions Law. This ruling builds upon the legal framework established by Federal Decree-Law No. (33) of 2021, which governs labour relations in the UAE, and highlights the flexibility in wage payment mechanisms, whether through the traditional Wage Protection System (WPS) or other approved systems,” said Navandeep Matta, senior associate, Kochhar & Co Inc. Legal Consultants (Dubai Branch).

By awarding some part of the complainant’s salary in EcoWatt tokens, Matta said, not only did it protect the worker’s right to his earnings but also maintained pace with technological advancement, thereby, highlighting that methods used to pay can be changed over time.

Irina Heaver, a partner at UAE law firm NeosLegal, clarified that under the ruling of the Dubai Court of First Instance, Project Tokens (which can also be called cryptos), which were part of the employment contract in addition to salary (in dirhams), were found to be a valid form of compensation and awarded to the employee.

“The court recognised project tokens as a legitimate part of an employee’s salary. With over 3,000 crypto companies employing tens of thousands across the UAE, this ruling is a win for employees’ rights. In the Web3 space, it’s common for projects to reward employees with tokens, aligning their interests with the project’s success. Why should venture capitalists have all the upside? Employees, who are the backbone of these innovations, deserve to share in that success,” she explained.

"This, however, does not in any way change or impact the fact that the AED dirham is the only legal tender in the UAE and that salary payments in the UAE need to be registered with the WPS system, which only operates with AED. This case concerns additional employee benefits that the employer may promise to the employees, such as flights home, bonuses, shares in the business. In this instance, it was the Project Tokens,” she said, adding that some media outlets and social media accounts misinterpreted this labour case ruling, creating misleading headlines that announced various legislative changes in the UAE, which is not the case.

Abuwasel added that as the company did not provide evidence of payment of the due amount to the claimant for the claimed months in EcoWatt tokens, the court ordered the firm to pay the claimant the value of her wages in EcoWatt tokens.

In 2023, under the judgement number 6,947, the court ruled in a dispute where part of the employee’s salary was to be paid in EcoWatt tokens. The court acknowledged the inclusion of token in the employment contract, but ultimately refused the award amount in EcoWatt token, he said.

Cryptos gaining currency

Abuwasel said this evolution from 2023 to the 2024 judgement illustrates the UAE courts’ readiness to adapt to the changing financial landscape, providing a robust legal framework that respects modern financial practices while ensuring the protection of contractual rights.

Navandeep Matta added that the court’s decision of acceptance of cryptocurrencies as an acceptable mode of settlement symbolises an advancement towards incorporating digital currencies into the framework set up for UAE laws. “This evolution mirrors a broader global trend toward cryptocurrencies being recognised as legitimate assets, further entrenching their position as one of the innovative finance and technology hubs around.”

Cryptocurrencies are increasingly gaining currency in the UAE as many real estate companies also accept this new mode of payment from property buyers. Importantly, the developers convert cryptos immediately to fiat currency or bank transfers due to the volatility surrounding digital currencies.

“As digital currencies gain broader acceptance, we can expect them to enter various other business sectors as well. Industries such as real estate, retail, and even government services may start incorporating cryptocurrencies as a standard method of transaction. This evolution will drive innovation and create new opportunities for businesses and consumers alike, further solidifying the UAE’s position as a global leader in adopting cutting-edge financial technologies,” said Navandeep Matta.

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