The Dubai Court has ruled to accept cryptocurrencies as a legally recognized means of paying employees’ salaries.
In an unprecedented step, the Dubai Court of First Instance ruled on the legality of granting salaries in digital currencies under employment contracts, and this ruling – issued in Case No. 1739 of 2024 – is a major shift in the legal position of the State of U.A.E. towards crypto.
Lawyers, including Irina Heaver, a partner at UAE law firm NeosLegal, hailed the ruling as a “progressive approach” in line with the ever-evolving nature of financial transactions in the Web3 economy.
Employment contract disputes give way to recognition of cryptocurrency legitimacy
The legal dispute that led to this landmark ruling centered on a dispute between the plaintiff, an employee, and her employer, in which the employee did not receive her wages, wrongful dismissal compensation, and other entitlements.
The employment contract stipulated that part of the employee’s monthly salary would be paid in cash currencies in addition to 5,250 EcoWatts (one of the digital currencies), while the employer did not pay the cryptocurrency part of the salary for six months, prompting the employee to file a lawsuit.
In its 2024 ruling, the Dubai Court of First Instance ruled in favor of the employee, affirming the legality of paying the wage in digital currencies as stipulated in the employment contract, and ordered the employer to pay the salary in EcoWatt, according to the employment contract, without having to convert it into cash.
This decision marks a significant shift from the court’s previous position in a similar case in 2023, where the demand for the payment of wages in crypto was rejected due to the lack of a clear way to determine the value of these currencies
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Commenting on the verdict, Irina Hefer said:
“This decision reflects the increasing acceptance of cryptocurrencies in employment contracts and highlights the court’s recognition of the ever-evolving nature of financial transactions in the third web economy.”
She added that the ruling is a crucial recognition of how value is created and shared in the third web world, as it is common for a project to pay employees in a combination of cash and project currency.
Dubai officially recognises crypto as a means of value transfer
In 2023, the Dubai Court considered a similar case involving the inclusion of EcoWatt in the employment contract. Although the court acknowledged that the contract included payment in digital currencies, it did not rule – in the end – in favor of the employee, because he did not provide a clear and reliable way to convert digital currency into cash, and the court said at the time:
“It is proven according to the Court of Cassation that the determination of the employment relationship, its beginning, duration and consequences fall within the jurisdiction of the Court of First Instance, and since the plaintiff did not provide evidence of the value of the digital currency, the court will not consider it.”
The 2024 ruling highlighted the massive shift in the court’s stance towards cryptocurrencies. This time, the court recognized the validity of cryptocurrencies as a means of payment and mandated the payment of the agreed salary in EcoWatt without having to convert them into fiat currency.
The court’s decision was based on Article 912 of the UAE Civil Transactions Law, which states that wages are a right of the worker from the employer and that the employer must pay wages on time.
“Since the defendant did not provide evidence of payment in EcoWatt, the court orders the defendant to pay the plaintiff’s salaries in EcoWatt.”
The court’s decision is expected to encourage the increased inclusion of cryptocurrencies in day-to-day financial transactions within the U.A.E., potentially paving the way for greater adoption across sectors.
With more than 3,000 crypto companies operating in U.A.E. and employing tens of thousands of people, this provision provides a layer of necessary protection for employees.
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