The Dubai Court of First Instance has recognized wage payments made in cryptocurrency as legitimate under employment contracts, marking a significant shift in the judiciary’s position to cryptocurrency in the United Arab Emirates.
Partner at UAE legal firm NeosLegal Irina Heaver clarified that the court’s decision in case number 1739 of 2024 represents a change from its previous position in 2023, when a comparable claim was rejected due to the absence of specific valuation of the cryptocurrency in question.
According to Heaver, this demonstrates a “progressive approach” to incorporating virtual currencies into the nation’s economic and legal system.
The Dubai Court acknowledges the use of tokens in pay.
According to Heaver, the case had a worker who sued, alleging that their employer had failed to provide benefits such as pay and wrongful termination compensation.
The employee’s job contract called for a monthly payment of 5,250 EcoWatt tokens and 5,250 fiat currency. The employer’s failure to pay the tokens share of the employee’s income within the allotted six months is the root of the dispute.
The court recognized the EcoWatts coins’ inclusion in the contract in 2023. Nevertheless, because the employee did not offer a clear way to value the money in fiat terms, it did not enforce the payment in cryptocurrency.
“This ruling mirrored a conventional perspective, stressing the necessity of hard proof when working with non-traditional payment methods,” Heaver stated.
But according to the attorney, in 2024 the court “took a step forward,” finding in favor of the worker and directing the payment of the cryptocurrency income in accordance with the terms of the employment contract without changing it into fiat money. Heaver stated: “This decision reflects a broader acceptance of cryptocurrency in employment contracts and highlights the court’s recognition of the evolving nature of financial transactions within the Web3 economy.”
Heaver continued, “The court’s consistent application of legal principles in wage determination is demonstrated by its reliance in both judgments on the Federal Decree-Law No. 33 of 2021 and the UAE Civil Transactions Law.”
Wide-ranging effects on UAE’s use of cryptocurrencies
Heaver claims that the ruling also establishes a favorable precedent that will promote the continued use of virtual currency in routine financial operations. This, according to the attorney, encourages a more inventive and inclusive work climate. Heaver stated: “This ruling affirms that if an employment contract includes such terms, both the company and the employee must honor them. It is reassuring to see the court recognize that wages, whether paid in fiat or cryptocurrency, are the rightful entitlement of the employee for their agreed-upon work.”
Heaver continued, “The court’s consistent application of legal principles in wage determination is demonstrated by its reliance in both judgments on the Federal Decree-Law No. 33 of 2021 and the UAE Civil Transactions Law.”
Heaver went on to say that it’s a major step forward in the UAE’s quest to become a leader in the digital economy and a victory for the workers.
