On August 15, the Dubai Court of First Instance made a groundbreaking ruling confirming the legality of cryptocurrency payments for salaries as outlined in employment contracts.
This ruling, recorded as case number 1739 of 2024 (Labour), signifies a pivotal change in the UAE’s judicial perspective on digital currencies, underscoring the rising acceptance of cryptocurrencies in the region.
Dispute Over Crypto Salary Payments
The case centered around a conflict where the plaintiff, an employee, claimed he was owed unpaid wages, had been wrongfully terminated, and was denied other employment-related benefits.
The employment contract in question detailed a monthly salary in fiat currency as well as 5,250 EcoWatt tokens, a specific cryptocurrency. The court ruled in favor of the employee, mandating the employer to disburse the owed salary in EcoWatt tokens, as the employer failed to demonstrate proof of payment.
The employer contended that the plaintiff’s dismissal was justified and that the payments made in EcoWatt tokens were not legally binding. Yet, the court maintained that the contract distinctly specified payment in both fiat and cryptocurrency, with the employer lacking adequate evidence to confirm payment of the EcoWatt tokens.
This ruling underscores the necessity for explicit contractual agreements and illustrates the UAE’s willingness to embrace contemporary financial practices, marking another stride towards the country’s progressive handling of the cryptocurrency sector.
Reversal of Previous Legal Rulings
This decision significantly diverges from a previous ruling in 2023, where the same court dismissed a case involving EcoWatt tokens. In that instance, the employee’s failure to provide a clear valuation of the cryptocurrency led to the court refusing to enforce any payment.
The 2024 ruling showcases the court’s evolving position regarding digital currencies. By acknowledging cryptocurrencies as legitimate forms of compensation, the court has set a vital precedent that could inspire wider acceptance of digital currencies in various industries, including employment.
The decision draws upon Article 912 of the UAE Civil Transactions Law and Federal Decree-Law No. (33) of 2021, which regulates the determination and payment of wages.
As the UAE continues to establish itself as a global innovation hub, this ruling may facilitate further integration of digital currencies within the region’s legal and economic frameworks.
