Dubai’s highest court has ruled that a company must settle an employee’s Working Capital in UAE currency and a stipulated cryptocurrency as provided for in the work agreement.
This followed a case of arbitrary dismissal that was instituted by the employee against the company.
This decision was made in Dubai Courts of First Instance in case number 1739 of 2024; however, it is a new change and a progressive perspective as the sector of financial transactions is dynamic and ongoing.
He signed an employment contract that provided that he was to be paid a monthly salary in UAE dirhams and Ecowatt Tokens, which is a cryptocurrency. Following the case that concerned the arbitrary dismissal of the employee, the court decided in favor of the employee in terms of providing the employee with her wage in Ecowatt Token.
Besides, according to Mahmoud Abuwasel the managing partner of Wasel and Wasel, the major problem was that the employer had not paid the balance of 5,250 EcoWatt in respect of the salary for six months and or had dismissed the employee wrongfully.
“The judgment in Federal Case No. 2024/2021 delivered by Dubai Courts made some recent payments in Cryptocurrency lawful, qualifying them as a shift in the legal and economic structure of UAE At the core of the judgment is invoked the necessity of the recognition of the wages payment as one of the employee’s basic rights following the principle of freedom of work as protected under art. 912 of the Civil Transactions Law”, this decision further states.
According to Matta, when some portion of the complainant’s salary is given in EcoWatt tokens, not only did the workers’ right to his wages remain upheld, but the organization also adapted to modern technology, thereby, stressing that the methods of payment can be altered.
Irina Heaver, a partner at UAE law firm NeosLegal, elucidated that under the ruling of the Dubai Court of First Instance, Project Tokens (which can also be called cryptos), which were a portion of the employment contract in addition to salary (in dirhams), were found to be a binding form of reimbursement and thus awarded to the employee.
“The court acknowledged project tokens as part of employee compensation. There are more than 3000 registered crypto companies in the UAE employing thousands of people, so the ruling is a victory for employees. They fuel innovation and create value it doesn’t make sense to deprive them of a fair share of the results,” Irina said.
“This though does not alter or affect the position that AED dirham is the only legal tender in the UAE and that wages in the UAE have to be reported through the WPS system that only accepts AED. This case relates to other emoluments that the employer may offer to employees, for instance, flight to home, incentives, and stakes in that business. In this instance, it was the Project Tokens,” she said, and some media outlets and social media accounts twisted this labour case ruling and come up with wrong headlines that there are new laws in the UAE, which again is false.
Abuwasel further stated that since the company did not produce any evidence of payment of the due amount to the claimant for the claimed months in EcoWatt tokens the court directed the firm to pay the claimant the value of her wages in EcoWatt tokens.
“In 2023, in the judgment No.6,947 the court seated on a dispute in which a part of the remuneration to the employee was in EcoWatt tokens. Surprisingly the court recognized that token is part of the employment contract but denied him the award amount in the EcoWatt token, he said.
Cryptos gaining currency
Abuwasel said this transition from 2023 to the 2024 judgment shows that the UAE courts are capable of embracing these new changes in the financial industry and provide a relatively sound legal framework that embraces contemporary approaches toward cementing the sanctity of contracts without compromising the efficiencies and virtues of the financial industry.
Evidently, Navandeep Matta’s statement reveals that the court’s decision of acceptance of cryptocurrencies as an acceptable mode of settlement symbolizes an advancement toward the incorporation of digital currencies in the framework set up for the UAE laws.
“This evolution aligns itself with similar global developments of cryptocurrencies as being credible assets as they remain part of the innovative finance and technology hubs around.”
Cryptocurrencies are gradually finding their way into the UAE as most real estate firms also take this new form of payment from customers. In the meantime, the developers cash out the obtained cryptos to fiat money or bank transfers since there is a high fluctuation rate with the digital currency.
“Digital currencies are likely to diversify and expand into other spheres of business life as the latter accepts wider uses of these currencies With the openness of UAE to the future and embracing of dramatic technologies it is possible to expect the evolution of using cryptocurrencies in real estates, retail trade and even in government services areas of business This evolution will consequently contribute to further innovations and opportunities for business and consumers and thus strengthening UAE’s leadership in the utilization of innovative financial solutions”.
