The Dubai Court of First Instance has validated salary payments in crypto assets like Bitcoin, Ethereum, XRP, and others under employment contracts.
The ruling represents a significant milestone in the United Arab Emirates’ legal stance on cryptocurrency. In particular, it marks a departure from the court’s previous position in 2023. At the time, the same claim was dismissed due to the lack of precise valuation of the cryptocurrency involved.
Background of the Case
The case involved an employee who sued their employer for wrongful compensation termination and unpaid wages. The job agreement specified a salary in fiat currency and an extra 5,250 EcoWatt tokens. The dispute arose when the employer failed to pay the cryptocurrency piece of the salary for half a year.
In 2023, the court recognized the inclusion of EcoWatt tokens in the work contract. However, it declined to enforce crypto payment as the employee failed to provide a reliable method for converting the tokens’ value into traditional currency.
According to attorney Irina Heaver of UAE-based law firm NeosLegal, this ruling reflects a conservative approach, highlighting the need for tangible proof when dealing with non-traditional forms of payment.
In a notable reversal, the court ruled in the employee’s favor this year. It mandated the payment of the cryptocurrency salary as outlined in the employment contract without requiring conversion to traditional currency.
Heaver noted that this decision marks a significant milestone in the growing recognition of cryptocurrency in employment contracts. She believes it signifies a progressive approach towards the integration of crypto assets within the nation’s legal and economic systems.
Furthermore, the lawyer observes that this decision establishes a favorable precedent, promoting increased crypto adoption in daily financial transactions.
Notably, countries like New Zealand have already begun accepting cryptocurrency as a legitimate form of payment for income and salaries. Also, as The Crypto Basic reported in 2022, a financial institution in Texa offered employees Bitcoin salary.
Essentially, as the use of crypto assets continues to gain traction, more regions will likely follow suit and adopt similar approaches, paving the way for a more widespread acceptance of cryptocurrency in mainstream financial transactions.