In a groundbreaking decision, a Dubai court has ruled that a company must pay an employee’s salary in both UAE dirhams and cryptocurrency. The ruling, which emerged from a case involving arbitrary dismissal, marks a significant step forward in the legal recognition of digital currencies in employment contracts.

Background: The Case of Arbitrary Dismissal

The case began when an employee filed a lawsuit against her employer, claiming wrongful termination and unpaid wages. According to her employment contract, her salary was to be paid in a combination of UAE dirhams and Ecowatt Tokens, a type of cryptocurrency. The company, however, failed to pay the cryptocurrency portion of her salary for six months, leading to the legal dispute.

The Dubai Courts of First Instance ruled in favor of the employee, stating that the salary must be paid as agreed in the contract, including the Ecowatt Tokens. This decision is a landmark moment in the UAE, as it acknowledges cryptocurrency as a legitimate form of salary payment, reflecting the country’s evolving financial landscape.

Legal Implications: A Step Forward for Cryptocurrency

Legal experts have hailed the ruling as a significant advancement in the UAE’s approach to modern financial practices. Mahmoud Abuwasel, managing partner at Wasel and Wasel, noted that this decision reflects the UAE courts’ adaptability to the changing economic environment, ensuring that employees’ contractual rights are upheld.

The court’s decision underscores that while the UAE dirham remains the only legal tender in the country, cryptocurrency can be included in employment contracts as an additional benefit. Irina Heaver, a partner at NeosLegal, explained that this ruling is particularly relevant in industries like Web3, where it’s common for employees to be compensated with project tokens.

However, it’s important to note that all salary payments must still be registered with the Wage Protection System (WPS), which operates exclusively with AED. The use of cryptocurrency in this case was viewed as an additional benefit rather than a replacement for traditional currency.

Broader Impact: Cryptocurrencies Gaining Ground in the UAE

This ruling is part of a broader trend toward the acceptance of digital currencies in the UAE. Real estate companies, for instance, have already begun accepting cryptocurrencies as payment, immediately converting them to fiat currency to manage volatility. As digital currencies become more widely accepted, they are likely to penetrate other sectors, such as retail and government services, driving innovation and new business opportunities.

The Dubai court’s ruling represents a significant milestone in the integration of cryptocurrency into the legal and economic framework of the UAE. As the country continues to position itself as a leader in adopting cutting-edge financial technologies, this decision could pave the way for broader acceptance of digital currencies across various industries.