A recent judgment from the Dubai Court of First Instance determined that part of an employee’s remuneration can be paid in cryptocurrency, but notably does not change the basic principle that cryptocurrencies cannot be the sole form of remuneration in an employee’s salary package.
We assess the judgment and its effects on the employment landscape in the UAE below.
Recent Judgment of Dubai Court of First Instance
In August 2024, the Dubai Court of First Instance issued a judgment on a case wherein the claimant’s employment contract stipulated that they will be paid monthly salary in fiat currency (UAE Dirhams) in addition to receiving a payment via cryptocurrency, in EcoWatt tokens.
The claimant claimed that the defendant had failed to remunerate her in EcoWatt tokens for some time. Therefore, among other claims, the claimant sued the defendant for the outstanding EcoWatt tokens. In its decision, the Dubai Court of First Instance recognized the payment of a part of the remuneration in cryptocurrency and ordered the defendant to transfer the outstanding EcoWatt tokens to the claimant.
Effect on Salary Payments
While the judgment is significant in that it confirms that cryptocurrency is a valid form of remuneration under the UAE Labour Law, it does not change the basic principle that at least part of one’s salary must be paid in fiat currency.
It is not currently possible to declare the entire salary in an employment contract in a cryptocurrency. Within the jurisdiction of the Ministry of Human Resources and Emiratization, the Jebel Ali Free Zone, and the Dubai Multi Commodities Centre, salaries must be paid via the Wages Protection System (WPS).
The WPS monitors whether salaries are being paid on time and in full. The WPS only accepts salaries declared in UAE Dirhams or other major currency, such as US dollars, and not in cryptocurrencies. An employer seeking to pay an employee’s entire salary in a cryptocurrency would not comply with the WPS.
Similarly, free zone authorities that do not require compliance with the WPS will nevertheless expect an employer to submit an employment contract when applying for an employee’s work permit. For those free zones that issue standard-form contracts, these will usually require an employer to determine the salary in fiat currency. Payment in cryptocurrencies can therefore form an additional part of an employee’s remuneration package but cannot be the only form of remuneration.
Outlook
The judgment strengthens the acceptance of cryptocurrency as a valid form of remuneration that can be claimed in the event of nonpayment by the employer. However, further amendments to existing laws and regulations will be required before cryptocurrencies can be accepted as the sole form of remuneration.