Fired Employee Entitled to Ecowatt Token Portion of Salary, Says Dubai Courts
In a groundbreaking decision, the Dubai Courts of First Instance has ordered a company to settle an employee’s wage dues in both UAE dirhams and cryptocurrency, marking a significant shift in the region’s legal and financial landscape. The case, numbered 1739 of 2024, involved an employee who had filed a lawsuit against her employer for arbitrary dismissal and unpaid wages.
The court’s decision highlights the growing acceptance of cryptocurrency as a legitimate form of payment in the UAE, reflecting the nation’s progressive stance towards evolving financial technologies. The employee’s contract stipulated that her monthly salary be paid in both UAE dirhams and Ecowatt Tokens, a form of cryptocurrency. Following the court’s ruling in her favor, the company was instructed to pay the outstanding 5,250 Ecowatt Tokens, in addition to the unpaid dirhams.
Mahmoud Abuwasel, managing partner of Wasel and Wasel, elaborated on the case, noting that the dispute primarily centered on the employer’s failure to compensate the employee with the agreed-upon Ecowatt Tokens for six months, alongside allegations of wrongful termination. “Dubai Courts have made a landmark ruling that salaries paid in cryptocurrency are legally valid, signaling a significant change in the legal and economic landscape of the UAE,” said Abuwasel. He emphasized that the ruling reinforces the principle that wages, whether in traditional or digital forms, are a fundamental right of the employee.
Navandeep Matta, senior associate at Kochhar & Co Inc. Legal Consultants (Dubai Branch), further explained the ruling’s significance within the UAE’s legal framework. He highlighted that the decision aligns with Article 912 of the Civil Transactions Law and builds on Federal Decree-law No. (33) of 2021, which governs labor relations in the UAE. “This ruling underscores the flexibility in wage payment mechanisms, whether through the traditional Wage Protection System (WPS) or other approved systems,” Matta noted.
By mandating that a portion of the employee’s salary be paid in Ecowatt Tokens, the court not only upheld the employee’s right to her earnings but also recognized the need to adapt to technological advancements. “The court’s acceptance of project tokens as a legitimate form of compensation shows that payment methods can evolve over time,” Matta added.
Irina Heaver, a partner at UAE law firm Neoslegal, provided additional context to the ruling, explaining that the Dubai Courts of First Instance found that Project Tokens, or cryptocurrencies, included in employment contracts are a valid form of compensation. “With over 3,000 crypto companies employing thousands across the UAE, this ruling is a win for employees’ rights. In the Web3 space, it’s common for projects to reward employees with tokens, aligning their interests with the project’s success,” Heaver said.
Abuwasel also noted that the company in question failed to provide evidence of payment for the claimed months in Ecowatt Tokens, leading the court to order the firm to pay the equivalent value of her wages in the specified cryptocurrency.
This ruling marks an evolution from a previous judgment in 2023, where the court had acknowledged the inclusion of tokens in an employment contract but ultimately refused the award amount in Ecowatt Tokens. “This evolution from 2023 to the 2024 judgment illustrates the UAE courts’ readiness to adapt to the changing financial landscape, providing a robust legal framework that respects modern financial practices while ensuring the protection of contractual rights,” Abuwasel added.
Matta concluded by stating that the court’s acceptance of cryptocurrencies as a legitimate mode of settlement symbolizes a broader global trend towards the recognition of digital currencies as legitimate assets. “As digital currencies gain broader acceptance, we can expect them to enter various other business sectors, driving innovation and creating new opportunities for businesses and consumers alike,” he said.
The ruling has the potential to impact various industries in the UAE, including real estate and retail, where cryptocurrencies are increasingly being accepted as a standard method of payment. As the UAE continues to position itself as a global leader in adopting cutting-edge financial technologies, this landmark ruling sets a precedent for future legal decisions involving digital assets.
