In a groundbreaking decision, the Dubai Court of First Instance has recognized salary payments in cryptocurrency as valid under employment contracts, marking a significant shift in the United Arab Emirates’ approach to digital currencies.

The ruling, made in case number 1739 of 2024, was highlighted by Irina Heaver, a partner at UAE law firm NeosLegal. Heaver noted that this decision represents a departure from the court’s earlier stance in 2023, where a similar claim was dismissed due to the lack of precise valuation for the cryptocurrency involved.

“This ruling reflects a progressive approach to incorporating digital currencies into the UAE’s legal and economic systems,” Heaver stated.

The case involved an employee who sued their employer for unpaid wages, wrongful termination compensation, and other benefits. The employee’s contract specified a monthly salary in fiat currency along with 5,250 EcoWatt tokens. The dispute arose when the employer failed to pay the crypto portion of the salary for six consecutive months.

While the court in 2023 acknowledged the inclusion of EcoWatt tokens in the employment contract, it refused to enforce the payment in cryptocurrency due to the absence of a clear method for converting the tokens into fiat currency. According to Heaver, this reflected a traditional viewpoint that emphasized the necessity of concrete valuation evidence when dealing with non-traditional payment forms.

However, in 2024, the court reversed its earlier position, ruling in favor of the employee and ordering the payment of the crypto salary as outlined in the employment contract, without requiring conversion into fiat. “This decision underscores the court’s broader acceptance of cryptocurrency in employment contracts and its recognition of the evolving nature of financial transactions in the Web3 economy,” Heaver commented.

Heaver also emphasized that the court’s reliance on the UAE Civil Transactions Law and Federal Decree-Law No. 33 of 2021 in both rulings demonstrates the consistent application of legal principles in wage disputes.

Implications for Crypto Adoption in the UAE

This landmark ruling is expected to have far-reaching implications for the adoption of digital currencies in the UAE. Heaver believes that it sets a positive precedent, encouraging the further integration of cryptocurrency into everyday financial transactions and fostering a more inclusive and innovative business environment.

“The ruling affirms that employment contract terms, whether involving fiat or cryptocurrency, must be honored by both employers and employees,” Heaver said. “It’s a reassuring step towards recognizing that wages, regardless of the form of payment, are the rightful entitlement of employees for their work.”

Heaver concluded that this decision is not only a victory for employees but also a significant milestone in the UAE’s journey toward becoming a leader in the digital economy.

Source: Cointelegraph