A recent court order in Dubai appears to have legitimized salary payment using crypto, but some experts point to unanswered questions.
It is unclear whether the ruling will be appealed.
A Dubai court ordered a company to compensate a worker through a cryptocurrency token, as stipulated in the employment contract, a legal precedent that raises several questions even as it lends some legitimization to crypto in the region.
The ruling does not, however, necessarily mean crypto is legalized for salary payments in general, two Dubai-based lawyers told CoinDesk.
“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, a dispute resolution think tank. “The ruling does not clarify which Virtual Assets. Would an approval from Dubai’s Virtual Assets Regulatory Authority be required?”
The order by Dubai’s court of first instance is dated July 17. Under Dubai labor laws there is a 15-day appeal period. Given the private nature of legal proceedings in Dubai, neither the name of the plaintiff nor the company were revealed and it’s not clear if an appeal has been lodged.
The complainant alleged the company stopped paying their salary without reason for five months before terminating the contract. The court ordered the employer to pay 62,867 dirhams ($17,116) and 39,200 of the ecowatt (EWT) cryptocurrency, as unpaid dues. The token’s value on different price-tracking websites varies widely, making it difficult to value the payment in dollar terms.
The court’s decision “supports the payment of salaries in cryptocurrencies, provided both parties agree to this arrangement in the employment contract,” said Navandeep Matta, a senior associate at Kochhar & Co. Legal Consultants.
This could mean that there are chances other sectors start offering salaries with Virtual Assets as a component,” said Dhawan.
Still, the lawyers said the ruling may be specific to this case and cryptocurrency, begging more questions.
Matta said “As of now, the application of these regulations is limited to the Emirate of Dubai” and not in the six other emirates of the United Arab Emirates.
