Dubai court recognizes employees’ right to receive salary in digital assets

Getting your Trinity Audio player ready...

Employees in the United Arab Emirates (UAE) can receive salaries in digital assets after a Dubai Court of First Instance overruled a 2023 decision, setting a new legal precedent.

According to the ruling in case number 1739 of 2024, the court held that employees are entitled to receive compensation in both fiat currencies and digital currencies subject to the terms of the employment contract. The case, an appeal from a lower court, first seized the spotlight in 2023 after the plaintiff dragged his employers to court over the non-payment of 5,250 EcoWatt tokens.

While the lower court acknowledged including payment in Ecowatt tokens in the employment contracts, the court refused to order the employer to make the payment. The court hinged its decision on the absence of a clear method to calculate the value of the digital currency in fiat.

The decision reflects a cautious and traditional approach by the court in dealing with digital currencies in labor laws, but upon appeal, it appears that the legal system has had a change of heart.

In the latest ruling, the court recognized the right for employees to receive their remuneration in digital currencies, ordering the employee to make payments in EcoWatt tokens rather than converting them to fiat. The court based its ruling on the UAE Civil Transactions Law and the mainstream acceptance of virtual currencies in commercial transactions.

“This decision reflects a broader acceptance of cryptocurrency in employment contracts and highlights the court’s recognition of the evolving nature of financial transactions within the Web3 economy,” said Irina Heaver, a partner at NeosLegal.

The new ruling establishes a new legal precedent for employers, but there are concerns that the decision of employees to request wages in digital currencies may require the approval of regulators.

“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,” said Ankita Dhawan, a senior associate at Métis Institute.

Dubai’s pioneering efforts

Dubai’s stance on digital assets has been described as forward-thinking by subject matter experts, with city regulators keen on integrating the asset class into all facets of its economy.

The city adopted a robust regulation and a new regulator to oversee the actions of virtual asset service providers in the space. Accompanied by a slew of Web3 initiatives, the moves have birthed positive results for the city, including attracting the interest of several global firms.

While Dubai has taken the lead in the Middle East, sustained efforts could see it surge to become the global leader for all things digital assets.

Watch: The Middle East’s Blockchain Race