UAE Employees Can Now Be Paid in Cryptocurrency, But Only in Certain Circumstances

Bitcoin, or any other cryptocurrency in the UAE for that matter, is still not recognized as a legal tender for payment.

Salaries in Bitcoin or any other cryptocurrency are still not legal tender in the United Arab Emirates (UAE). However, one incident has sparked discussion on the possibility of crypto salaries.

A UAE company promised to pay monthly salaries in fiat currency and 5,250 EcoWatt tokens. But the company failed to pay the digital tokens, leading employees to take legal action.

The court ruled that the company must fulfill its commitment and clear its six-month cryptocurrency debt. This verdict might pave the way for future payments in cryptocurrencies, including Bitcoin, especially in the digital asset industry.

However, the contract must clearly state this arrangement for complete transparency. But crypto usage is risky due to fluctuating digital token values.

For instance, BTC might be valued at $59,000 in a contract, but later it could change to $35,000, resulting in employee losses. Instead, it can be used for employee bonuses or incentives, creating a mutually beneficial scenario.

Companies opting for cryptocurrency payments will likely hire candidates who are crypto-literate and willing to accept this modern payment method.

The UAE is also developing its central bank digital currency, the Digital Dirham, whose utility remains unclear but could function as a regional stablecoin.

In 2022, Dubai introduced the Virtual Assets Regulatory Authority (VARA) to create a framework for the crypto sphere, aiming to protect investors and facilitate international standards for the industry.

UAE employees will be paid in cryptocurrency under specific conditions, and it remains to be seen how other companies will respond to this development.

They will need to carefully draft contracts and discuss them with candidates before hiring. The Wage Protection System (WPS) governs employee salary payments and ensures timely salary disbursement.

However, crypto salaries may face challenges as they are not fully recognized in the WPS Ministerial Resolutions. Companies disregarding pertinent resolutions may be penalized or fined.

According to Hala Harb, an associate at BSA Ahmad Bin Hezeem & Associates, crypto salaries will be more prevalent in companies operating within the virtual asset sector.

If any additional fees are applicable for digital currencies, employers must specify the payment schedule and method of addressing them.

In addition to volatility, they should consider conversion through banks as a potential challenge.

When banks convert cryptocurrencies to fiat currency, there might be difficulties in obtaining the agreed-upon rate, which could be either higher or lower. Hence, adjustment clauses will need to be included in contracts.

Agreements involving cryptocurrency payments are likely to come with caveats. Experts advise including a disclaimer in agreements or employment letters outlining the risks associated with cryptocurrencies, such as volatility and fluctuations, which could impact their daily income.

While the UAE may not fully implement payments in Bitcoin tokens, it is taking steps to resolve any disputes that may arise.

Crypto salaries are a reality and could happen, but the associated risks draw a boundary. Natalie Jones, a partner at DLA Piper, iterated that it is harder for employers and employees to agree on specific payment terms for crypto, so a more logical approach would be to use digital currencies for compensation or bonuses.

Currently, salaries can only be established in fiat currencies, the details of which must be submitted to the relevant labor authority, and this could be USD or AUD, to name a few.

Companies must adhere to WPS to ensure timely payments through authorized channels, such as WPS, into a local bank account. Salaries paid through cryptos will not be compliant with that mechanism.

The UAE is discussing the court’s decision, which mandates that the company pay its six-month dues in cryptocurrency, certifying it as a legitimate payment method but not inherently enforcing it throughout the region.

It will take time for decentralized currencies to be implemented in all regions of the globe, not just the UAE.

Stringent regulations are imposed on cryptocurrency due to their high volatility, which is influenced even by minor shifts in economic conditions.

This is evident in the demand-supply mechanism of digital currencies, which provides a finite number of blocks. The price is influenced by each deposit and withdrawal.

したがって、経済状況がデジタルトークンの価格に影響を与えるのは自然なことです。しかし、この訴訟は従業員に仮想通貨やビットコインで給与を支払おうとする将来のプロジェクトや企業にとって先例となるだろう。

給料を全額支払うのは現実的ではないかもしれませんが、その一部をボーナスに充てることは可能です。契約はより重要になり、現在の価値が期待と一致しない可能性があるため、従業員は自分たちの働き方を理解する必要があります。

UAE中央銀行は、来年に成熟する仮想通貨規制ガイドラインを発表しました。

これにより、国内における暗号通貨のより実用的な使用例が紹介されます。興味深いことに、2023年の訴訟では、裁判所は評価の問題を理由に仮想通貨での和解を拒否しました。

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