‘Buying the Dip’ for employers or in other words, rewarding in crypto-currencies. The Dutch newspaper Financieel Dagblad also headlined on last Valentine’s Day “A salary in bitcoins: how does it work?” Especially in the current times of labour shortages and the difficult quest to retain (young) employees, we wonder: what is the modern employer still waiting for? Why have a company car or company shares, but not cryptocurrencies? Let’s start at the beginning.
WHAT ARE CRYPTOCURRENCIES?
Meanwhile, the many forms of crypto assets are springing up like mushrooms. This blog focuses on traditional crypto-currencies, the best known of which is bitcoin. A bitcoin consists of a unique, digitally encrypted string of numbers and letters, and has no physical manifestation. Bitcoins can be created by mining and can (subsequently) be used to make payments. Of course, different crypto currencies also have different properties and applications.
To date, bitcoins are not recognised as a means of money or financial product under the Financial Supervision Act or as common money under contract law. Despite this disqualification, this does not prevent the employment law possibility of remuneration in bitcoins.
Under certain circumstances, bitcoins can fall under the employment law wage concept. In a nutshell, the following steps should be followed:
• Do bitcoins qualify as remuneration owed by the employer to the employee in respect of the stipulated work? In other words, remuneration in bitcoins must be linked to the stipulated work an employee is required to perform for the employer;
• If yes, the follow-up question is whether bitcoins fall under one of the permissible forms of pay under Section 7:617 of the Dutch Civil Code;
If no, then, in short, there is still room to reward in bitcoins.
Part three is legally a bit more technical but easy to follow from the cradle of labour law: employee protection. For example, if employer and employee agree that employee will be paid part of the salary in bitcoins, in our opinion, the part of the salary in bitcoins qualifies as stipulated consideration for labour owed by the employer to the employee just as much as the part of the salary paid in euros. Thus, stipulated bitcoins also fall within the labour law concept of wages.
The consequence of this qualification is that the employee retains an entitlement to continued payment of bitcoins during – for example – incapacity for work and other circumstances that are within the employer’s sphere of risk in accordance with Articles 7:628(1) and 7:629(1) of the Civil Code.
A few important points of attention in a row:
Only above the minimum wage: the only restriction regarding payment in bitcoins relates to the amount of the wage. Currently, it is only possible to pay out the part of the full wage above the minimum wage in bitcoins (Section 7a Minimum Wage and Minimum Holiday Allowance Act);
Duty to inform: given the volatile nature of bitcoins and the employer’s statutory duty to inform pursuant to Section 7:655 of the Dutch Civil Code, in combination with the Transparent and Predictable Terms of Employment Act, the employer should carefully inform the employee about the possibility of remuneration in bitcoins and the associated risks. Also consider the currently limited financial supervision;
If an employee changes his or her mind and wants to return to the stipulated bitcoins, he or she is always free to demand payment in Dutch money (euros) on the basis of Article 7:620(2) of the Dutch Civil Code with effect from the second payment day (usually the next monthly salary payment). Conversion into euros is in principle made at the exchange rate applicable at the time of payment (Article 6:124 of the Dutch Civil Code);
Record it: make clear agreements regarding the payment of bitcoins and record these agreements, preferably in the employment contract itself.
So much for the main employment law points. Besides employment law, remuneration in cryptocurrencies is inextricably linked to financial law, general contract law and tax law. Are you curious about how the different areas of law relate to each other and what employment law opportunities this results in? Or do you have other questions? Then read the article by our colleague Margot Hoving in ArbeidsRecht 2023/1 or contact us.