Will Dubai Soon Cash Out Their Salary in Crypto?

DUBAI COURT ACCEPTS CRYPTOCURRENCY AS A VALID SALARY PAYMENT METHOD.

A ruling in Dubai court has mandated that a company can pay their employee's outstanding dues in both UAE dirhams and cryptocurrency, as specified in their contract.

The decision came after the employee filed a lawsuit for arbitrary dismissal against the company. Announced in case number 1739 of 2024, the ruling by the Dubai Courts of First Instance marks a significant shift in the legal landscape, reflecting the continuous evolution of financial transactions.

The employee’s contract stipulated that the salary be paid in both UAE dirhams and Ecowatt Tokens, a type of cryptocurrency. Following the court's ruling in favor of the employee, the company was ordered to pay the due wages in Ecowatt Tokens as well.

Mahmoud Abuwasel, managing partner of Wasel and Wasel, highlighted that the dispute revolved around the company's failure to pay the 5,250 EcoWatt token portion of the salary for six months, coupled with allegations of wrongful termination.

"This landmark ruling by Dubai Courts establishes that salaries paid in cryptocurrency are legally valid, marking a substantial change in the UAE’s legal and economic environment," said Navandeep Matta, a senior associate at Kochhar & Co Inc. Legal Consultants (Dubai Branch). "The decision emphasizes that wages are a fundamental right of the employee, grounded in the agreed terms of employment and protected under Article 912 of the Civil Transactions Law. This ruling also aligns with the legal framework set by Federal Decree-Law No. (33) of 2021, which regulates labor relations in the UAE, showcasing flexibility in wage payment methods, including the traditional Wage Protection System (WPS) and other approved mechanisms."

By awarding a portion of the employee’s salary in EcoWatt tokens, the ruling not only safeguarded the worker’s earnings but also kept pace with technological advancements, underscoring that payment methods can evolve over time.

Irina Heaver, a partner at NeosLegal, explained that under this ruling, project tokens included in the employment contract were deemed a valid form of compensation. "The court recognized project tokens as a legitimate part of an employee’s salary. With more than 3,000 crypto companies employing thousands across the UAE, this ruling is a victory for employees’ rights. In the Web 3 sector, it's common for projects to reward employees with tokens, aligning their interests with the project's success. Employees deserve to share in that success, just like venture capitalists," she added.

However, Heaver clarified that this rule does not change the fact that the UAE dirham remains the only legal tender in the UAE, and salary payments must be registered with the WPS system, which only operates with AED. "This case pertains to additional employee benefits that an employer might promise, such as flights home, bonuses, or shares in the business. In this instance, it involved project tokens," she said, noting that some media reports misinterpreted the ruling, suggesting various legislative changes that are not accurate.

Abuwasel further explained that since the company could not provide evidence of payment for the due months in EcoWatt tokens, the court ordered the company to pay the value of the wages in EcoWatt tokens.

Cryptos Gaining Currency

In a previous rule in 2023, under judgment number 6,947, the court acknowledged the inclusion of EcoWatt tokens in an employment contract but ultimately denied awarding the amount in tokens. The shift from the 2023 to the 2024 judgment illustrates the UAE courts’ readiness to adapt to the evolving financial landscape, creating a robust legal framework that honors modern financial practices while protecting contractual rights.

Navandeep Matta added that the court's acceptance of cryptocurrencies as a valid form of settlement represents a step forward in integrating digital currencies into the UAE's legal framework. "This development mirrors a broader global trend towards recognizing cryptocurrencies as legitimate assets, further solidifying the UAE's reputation as a hub for innovative finance and technology."

As cryptocurrencies gain wider acceptance, they are also becoming more prevalent in the UAE’s real estate sector, with many companies accepting digital currencies from property buyers. Notably, developers often convert cryptocurrencies to fiat currency or bank transfers immediately due to the volatility associated with digital currencies.

"As digital currencies gain broader acceptance, we can expect them to be incorporated into various other sectors, including Dubai real estate, retail, and even government services. This evolution will drive innovation and create new opportunities for businesses and consumers alike, further enhancing the UAE’s position as a global leader in adopting cutting-edge financial technologies," Matta concluded. If you’re looking to buy property in Dubai or interested in a new launch project in Dubai, it's worth noting how rapidly these payment methods are evolving, including the acceptance of Dubai salaries in crypto.