UPDATED: Dubai court ruling on cryptocurrency wages sparks debate

Update: This story has been updated to reflect further comment from industry analysts on the interpretation of the ruling, as well details from the judgment itself. It’s also been updated to reflect that the ruling pertained to the emirate of Dubai.

Wages in Dubai could be paid in cryptocurrency if the terms are clearly defined, according to a new judgment from the Dubai Court of First Instance.

This decision, made in case number 1739 of 2024 (labour), follows a prior case from 2023 where a similar claim was initially denied by the court.

According to a note published by law firm Wasel & Wasel last week, the 2023 case involved an employee whose contract included both fiat currency and EcoWatt tokens.

“The plaintiff’s employment contract stipulated a monthly salary in fiat currency and an additional 5,250 EcoWatt tokens, a form of cryptocurrency,” wrote Mahmoud Abuwasel, a Managing Partner at Wasel & Wasel.

“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,” Abuwasel added.

In 2023, the Dubai Court of First Instance ruled against this claim, owing to what it said was a lack of a precise valuation of the EcoWatt tokens. At that time, the court had required tangible evidence of the digital currency’s value in fiat terms, reflecting a more traditional approach to financial dispute, Abuwasel noted.

But in an evolutionary approach, a similar case in 2024 has resulted in the court’s ruling mandating an employer to compensate the worker with both the overdue fiat amount and the missing EcoWatt tokens.

A part of the judgment outlined the following, according to Wasel & Wasel’s note.

“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. Regarding the claimant’s request for [redacted] AED for the delayed salaries over [redacted] months in EcoWatt tokens according to the contract, as the respondent did not provide evidence of payment of the due amount to the claimant for the claimed months in EcoWatt tokens, the court orders the respondent to pay the claimant the value of her wages in EcoWatt tokens amounting to [redacted] EcoWatt tokens.”

It’s unclear if the defendant is the same company which was taken to court in 2023. Nevertheless, Abuwasel said the ruling is a “significant step forward.”

“The court is now accepting and enforcing cryptocurrency as part of wage payments, provided that the contract clearly defines these terms,” he noted.

The decision reinforces the importance of clear and precise contractual terms, ensuring that both traditional and digital forms of payment are adequately addressed in employment agreements.

“This evolution in legal interpretation is a positive development for the integration of cryptocurrencies in business practices,” said Abuwasel.

“It sets a precedent for future cases and underscores the UAE’s commitment to adapting to the changing financial landscape.”

Debate over ruling

Some analysts, though, have said that the judgment does not necessarily mean that salaries can be paid in cryptocurrencies as of yet, but that it can rather form part of a compensation package.

“The ruling merely recognises a specific Virtual Asset (EcoWatt Tokens) as being a legally valid part of a specific employee’s compensation package, indirectly implying that employee compensation packages may include virtual assets,” Ankita Dhawan, a senior associate at Métis Institute, told global cryptocurrency news website Coindesk.

“The ruling does not clarify which virtual assets. Would an approval from Dubai’s Virtual Assets Regulatory Authority be required?”

Navandeep Matta, a senior associate at Kochhar & Co. Legal Consultants, further told Coindesk that the court’s decision “supports” payment of salaries in cryptocurrencies, provided the employer and employee agree on the terms.

“As of now, the application of these regulations is limited to the Emirate of Dubai,” Matta told Coindesk.

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