In a landmark decision, the Dubai Court of First Instance recognised the validity of salary payments in cryptocurrencies within employment contracts. This ruling, referring to case number 1739 of 2024, marks a significant change in the UAE’s judicial approach to digital currencies, particularly in the context of employment agreements.
Complaint by an employee
The case at hand concerns an employee who filed a lawsuit against his employer for non-payment of wages, compensation for unfair dismissal, and other benefits. According to the employment contract, the employee was entitled to a monthly salary in fiat currency and an additional payment of 5,250 EcoWatt tokens. However, the employer did not pay the cryptocurrency portion of the salary for six months, leading to the dispute.
Evolution of the legal approach to digital currencies
In 2023, the Dubai court recognised the inclusion of EcoWatt tokens in the employment contract, but did not enforce payment in cryptocurrency. The court’s decision was mainly based on the employee’s inability to provide a clear method to value the tokens in terms of fiat currency. This outcome reflected a traditional approach, emphasising the need for concrete evidence of valuation when dealing with unconventional forms of payment. In a fundamental shift, the 2024 ruling favoured the employee, ordering the employer to fulfil its contractual obligation by paying wages in cryptocurrency as agreed, without requiring conversion to fiat currency. This decision highlights the court’s evolving understanding and acceptance of digital currencies within the legal framework of employment contracts.
Consistent law enforcement in the United Arab Emirates
The court decisions in 2023 and 2024 are both based on the UAE Civil Transactions Law and Federal Law Decree No. 33 of 2021. These legal references demonstrate the consistent application of legal principles regarding the determination of wages, regardless of whether payment is made in fiat currency or cryptocurrency. This ruling sets a significant precedent for the integration of digital currencies into everyday financial transactions within the UAE. It confirms that when an employment contract includes cryptocurrency as a form of payment, both parties are legally obliged to abide by those terms. This development should encourage wider adoption of digital currencies in the UAE’s business environment, aligning with the nation’s goals of becoming a leader in the digital economy.