Introduction
Wages are a crucial element of the employment sector, representing the monetary compensation workers receive for their efforts. They directly impact employees’; standard of living, economic stability, and overall well-being, and are a fundamental component of business operations due to their influence on recruitment decisions and labor costs. Wages are often determined as part of a labor agreement. In a world shifting towards digitization, the possibility of remunerating workers in virtual assets (such as cryptocurrencies) has sparked legal debates among businesses, workers, and authorities regarding its validity in labor contracts. This article explores the legality of virtual asset wage payments from the perspective of Lebanese and Emirati laws and jurisprudence.
- UAE
As UAE positions itself as a global epicenter for fintech and blockchain-based technologies, paying employees in virtual assets is becoming a tangible possibility, reflecting the nation’s avant-garde mindset. According to the Federal Decree-Law No. (33) of 2021 (Regulation of Employment Relationship) and the Wages Protection System (WPS), the payment of basic wages, excluding additional benefits, must be made through cash allowances in Dirhams or any other currency agreed upon by the employer and employee. Additionally, benefits that make up the total wage may be compensated in kind (assets), provided they align with the criteria outlined in the aforementioned law.
Law No. (4) of 2022 Regulating Virtual Assets in the Emirate of Dubai defines a virtual asset as a digital representation of value that may be digitally traded, transferred, or used as an exchange or payment tool, or for investment purposes, including Virtual Tokens. In principle, virtual assets are legally recognized and regulated in Dubai. However, in 2023, the Dubai Court of First Instance (No. 6947, dated 15/11/2023) rejected a claim for compensation in a wrongful employment termination lawsuit involving payment in virtual assets, as stipulated in the labor contract, citing a lack of specific valuation for the “EcoWatt Tokens.” The court acknowledged the inclusion of EcoWatt Tokens as benefits in the contract but did not enforce payment in crypto currency, instead requiring evidence of the digital currency’s fiat value, suggesting a more conventional approach to financial disputes.
In contrast, in a groundbreaking direction, a similar lawsuit submitted before the Dubai Court of First Instance in 2024 resulted in a court order (No. 1739, dated 17/07/2024) requiring an employer to compensate the worker for both the delayed cash sum (basic wage) and the lost EcoWatt tokens as benefits specified in the labor agreement. The decision enforces the importance of clear and precise contractual terms, ensuring that both traditional and digital forms of payment are adequately addressed in employment agreements. Some analysis’s consider that the judgment does not necessarily mean that salaries can be paid in cryptocurrencues as of yet, but that it can rather form part of a compensation package.
- Lebanon
Lebanon was among the first countries in the region to adopt labor laws. These laws, dating back to that era, addressed traditional societies and businesses, taking into account social inequalities between regions in Lebanon, economic sectors, and social classes. The Lebanese Labor Law stipulates in its first article that employee wages can be paid either by cash allowances or in- kind. Article 47 of the same law reaffirms the ability of the employee and employer to agree upon in-kind salary payments, such as assets, without specifying the nature of these assets.
Thus, both parties in a contract can agree on the asset they deem appropriate, as long as it aligns with the criteria set in other laws, such as the validity and legality of the asset and its determinability. Therefore, virtual assets are eligible as a method of salary payment, provided the labor contract includes a clause specifying that the salary is paid through virtual assets or any other type of asset. It is also important to note that, to date, Lebanese courts have not rendered any decisions specifically addressing the payment of salaries in crypto currencies.
Finally, it is worth mentioning that the payment of salaries in crypto currencies raises tax implications and legal questions regarding how income tax should be imposed on such assets under current regulations.
- Conclusion
In conclusion, virtual asset wages in Dubai represent a new frontier in the employment market, reflecting the city’s ambition to be at the forefront of technology and finance. As the use of virtual currencies grows, interest in paying workers in digital assets will likely increase. However, widespread acceptance may be delayed as both the technology and legal framework evolve, given that only benefits may currently be settled in virtual assets in Dubai.
In contrast, although virtual asset salaries remain uncommon, Lebanese labor law permits their use as a method of wage payment. However, Lebanese legal texts lack clear definitions, regulations, and tax guidelines concerning such assets.
