Has the Dubai Court opened the door for pay packets paid in PEPE?

Introduction

In a notable development within the UAE, the Dubai Court of First Instance has issued a landmark ruling in 2024, officially recognising the payment of salaries in cryptocurrency under employment contracts.

This decision, delivered in case number 1739 of 2024 (Labour), marks a change from a prior 2023 ruling by the same court. In that earlier ruling, it had denied a similar claim involving crypto due to the employee’s failure to provide a precise valuation of the digital currency.

So, will we all be getting our pay cheques in crypto?

Background to the case

The case involved an employee who filed a lawsuit seeking unpaid wages, compensation for wrongful termination, and other employment-related benefits.

The employee’s contract specified a monthly salary in fiat currency, along with an additional 5,250 EcoWatt tokens, a type of cryptocurrency.

The dispute arose when the employer failed to pay the EcoWatt token portion of the salary for six months and allegedly wrongfully terminated the employee.

The court’s ruling is particularly notable for its recognition of crypto as a legitimate form of payment, despite the traditional preference for fiat currency in employment contracts.

The 2023 Judgment

In a related 2023 case (Judgment No. 6947 of 2023), the court had faced an employment dispute where part of the employee’s remuneration was to be paid in EcoWatt tokens.

While the court acknowledged the inclusion of these tokens in the employment contract, it ultimately refused to award the amount in cryptocurrency.

The court’s refusal was based on the employee’s inability to provide a clear method for calculating the value of the cryptocurrency in fiat currency terms.

This decision reflected a more cautious stance, emphasizing the need for precise and tangible evidence when dealing with unconventional forms of payment like digital currencies.

That court stated:

“It is established according to the Court of Cassation that determining the employment relationship, its start, duration, and the resulting effects falls under the authority of the trial court (Appeal No. 85 of 2005 Labour).

Accordingly, it is evident from the case documents and evidence that the employment relationship between the claimant and the respondent is governed by the fixed-term employment contract previously mentioned. Regarding the determination of the start date of the claimant’s employment and the monthly salary, the court relies on what the claimant stated.

As the claimant did not provide evidence of the value of the digital currency (EcoWatt tokens), the court disregards it, since the respondent did not provide opposing evidence or any defense.”

This statement from the 2023 judgment underscored the court’s traditional approach, requiring concrete evidence of the digital currency’s value before enforcing such a claim.

The 2024 Judgment

In a significant departure from that earlier decision, the Dubai Court adopted a more progressive stance in this 2024 judgement. Again, it concerned an employment dispute involving remuneration in EcoWatt tokens.

This time, the court ruled in favour of the employee, not only recognising the validity of payment in crypto but also ordering that the payment be made in EcoWatt tokens rather than converting them into fiat currency.

The court’s decision in 2024 was grounded in the principle that wages are a fundamental right of the employee for work performed. The court stated:

“Regarding the request for the monthly salary for [redacted] days of [redacted], it is established according to Article 912 of the Civil Transactions Law that wages are a right of the worker against the employer in return for the agreed work, and the provisions of Article 22 of Federal Decree-Law No. (33) of 2021 on the Regulation of Labour Relations provide that the employer is obligated to determine the amount and type of wage in the employment contract. The employer must pay the wages on due dates, either through the Wage Protection System (WPS) or any other approved systems. As the respondent did not provide evidence of payment, the court orders the respondent to pay the claimant [redacted] AED in addition to [redacted] EcoWatt tokens.”

This ruling represents a significant evolution in the court’s approach, demonstrating a greater acceptance of cryptocurrency as a valid and enforceable means of remuneration.

It emphasises the importance of upholding contractual agreements, provided they are clear, agreed upon by both parties, and not in conflict with public policy or law.

Implications

The court’s reliance on Article 912 of the UAE Civil Transactions Law and the Federal Decree-Law No. (33) of 2021 in both the 2023 and 2024 judgments highlights a consistent application of legal principles regarding the determination and payment of wages.

However, the interpretation of these provisions evolved between the two judgments, reflecting the broader acceptance and integration of digital currencies within the UAE’s legal and economic framework.

Conclusion

The Dubai Court’s 2024 ruling perhaps illustrates both the UAE’s progressive legal environment and the march of crypto into the mainstream.

The court’s willingness to enforce cryptocurrency payments as stipulated in contracts sets a positive precedent that could encourage further integration of digital currencies across various sectors, not just employment.

So, just maybe, the residents of the UAE might be getting a pay cheque made up of DOGE and PEPE after all…