In a major development for cryptocurrency in the UAE, the Dubai Court of First Instance has ruled that paying salaries in crypto is valid under employment contracts.
Irina Heaver, a partner at UAE law firm NeosLegal, stated that this ruling in case number 1739 of 2024 marks a change from the court's position in 2023. Previously, a similar case was dismissed because the crypto involved did not have a clear valuation.
Heaver views this as a “progressive approach” toward incorporating digital currencies into the UAE’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 employee's contract specified a monthly salary in fiat and 5,250 EcoWatt tokens. The dispute arose when the employer failed to pay the crypto portion of the salary for six months.
Crypto tokens now legally backed as part of wages and salary packages
In 2023, the court acknowledged that the EcoWatt tokens were part of the contract but did not enforce payment in crypto because the employee couldn't clearly value the tokens in fiat currency.
“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 ordering that the crypto salary be paid as specified in the contract, without converting it into fiat. Heaver said:
“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.”
Heaver added that the court’s use of the UAE Civil Transactions Law and Federal Decree-Law No. 33 of 2021 in both cases shows a consistent application of legal principles in determining wages.
Significant Impact on UAE's Crypto Adoption
Heaver also noted that this decision sets a positive example that could lead to greater integration of digital currencies in everyday financial transactions. The lawyer believes this will promote a more inclusive and innovative business environment. She said:
“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.”
Heaver concluded that this is a victory for employees and a significant step in the UAE’s progress toward becoming a leader in the digital economy.