In a recent article in Lexology, the UAE Dubai Court of First Instance has ruled in 2024 recognizing the payment of salaries in cryptocurrency under employment contracts. The decision was made in reference to case number 1739 of 2024.
According to Mahmoud Abuwasel from law firm Wasel & Wasel, “This decision, rendered in case number 1739 of 2024 (Labour), represents a notable departure from a previous judgment by the same court in 2023, where a similar claim involving cryptocurrency was denied due to the employee’s failure to provide a precise valuation of the digital currency.”
The case
The case was about unpaid wages and wrongful termination compensation where part of the payments was in EcoWatt tokens. The dispute centred on the defendant’s failure to pay the EcoWatt token portion of the salary for six months and the allegedly wrongful termination of the plaintiff’s employment.
The court recognized and enforced that crypto was a valid form of remuneration, despite the traditional payment norms that typically involve fiat currencies.
The court ruled in favour of the employee, not only recognizing the validity of payment in cryptocurrency but also ordering the payment to be made in EcoWatt tokens rather than converting it into fiat currency.
The court’s decision in 2024 was based on the principle that wages are a right of the employee for the work agreed upon. The court noted that as per Article 912 of the Civil Transactions Law, wages are a right of the worker against the employer in return for the agreed work and the provisions of Article 22 of Federal Decree-Law No. (33) of 2021 on the Regulation of Labour Relations and Article 16 of the Cabinet Resolution No. 1 of 2022 concerning the Executive Regulations of this Decree-Law provide that the employer is obligated to determine the amount and type of wage in the employment contract, and if not, the court shall determine it.
As such the court found that the employer must pay the wages to the workers on the due dates, either through the Wage Protection System (WPS) or any other approved systems, and it is the employer who is tasked with proving the payment of wages to the workers and providing evidence of that. As the respondent did not provide evidence of payment of the claimant’s salary for the claimed period, and since the documents were void of such evidence, the court orders the respondent to pay the claimant [redacted] AED in addition to [redacted] EcoWatt tokens.
Acccording to AbuWasel, “ This ruling marks a significant shift in the court’s approach, demonstrating a greater acceptance of cryptocurrency as a valid and enforceable means of remuneration. It underscores the importance of upholding contractual agreements as long as they are clear, agreed upon by both parties, and not in conflict with public policy or law.”
Abuwasel adds, “ The Dubai Court’s 2024 ruling is a testament to the UAE’s progressive legal environment, particularly regarding the use of digital currencies in employment contracts. The court’s willingness to enforce cryptocurrency payments as stipulated in contracts sets a positive precedent that will likely encourage further integration of digital currencies in various sectors, not just in employment.”
