Salaries in the UAE can now legally be paid in cryptocurrency, according to a landmark ruling by the Dubai Court of First Instance. The ruling, made in case number 1739 of 2024 (labor), clarifies that wages can be paid in digital currency if the terms are clearly defined in the employment contract.
This decision follows a previous case in 2023, where a similar claim was initially denied due to the lack of a clear valuation of the cryptocurrency involved. In that case, an employee's contract included both fiat currency and 5,250 EcoWatt tokens, a form of cryptocurrency. The dispute arose when the employer failed to pay the EcoWatt portion of the salary for six months, leading to the employee's wrongful termination claim.
At the time, the court required tangible evidence of the digital currency's value in fiat terms and ruled against the claim due to insufficient valuation. However, the 2024 ruling marks a significant shift, with the court now mandating the employer to compensate the worker with both the overdue fiat amount and the missing EcoWatt tokens.
Mahmoud Abuwasel, Managing Partner at Wasel & Wasel, noted that this ruling represents a "significant step forward" in the legal recognition of cryptocurrency as a valid form of wage payment.
"The court is now accepting and enforcing cryptocurrency as part of wage payments, provided that the contract clearly defines these terms,"
Abuwasel stated.
This decision underscores the importance of clear contractual terms that address both traditional and digital forms of payment in employment agreements. It also sets a precedent for future cases, highlighting the UAE's commitment to adapting to the evolving financial landscape.
This ruling is a positive development for the integration of cryptocurrencies into business practices, paving the way for broader acceptance and use in the region.
News Source: Gulf Business
