Could companies pay their employees’ salaries in cryptocurrency for consumption in a virtual reality? Or as salary in kind? The absence of a legal framework covering these possibilities makes them difficult to implement for the time being. It will also be necessary for the courts and tribunals to reach decisions on such an innovative issue.
Cryptocurrency is a digital asset or intangible resource that does not have a physical support and requires a guarantee of ownership through encryption systems. At present, there are multiple types of cryptocurrency including, for example, bit coins and ether, each with their own financial value.
Created using block chain technology, it is acquired by purchasing or exchange of the currency itself on specialized websites, with a fluctuating value depending on supply and demand, but is not considered as a means of payment and neither endorsed by central banks. In fact, in a joint report on February 9, 2021, the Bank of Spain and National Securities Market Commission (CNMV) warned of the possible risks of digital currency for investment.
In the absence of regulations, is it legally viable to pay a worker’s salary using digital currency?
The current legal framework governing the settlement and payment of salaries is based on the provisions of article 29.4 of the Workers’ Statute, which states as follows:
“A worker’s salary, as well as the delegated payment of Social Security payments may be made by an employer in legal tender or by check or other similar form of payment through credit institutions, subject to a report by the works council or staff delegate”.
The very wording of article 29.4 of the Workers’ Statute prohibits payment of salaries by digital currency, as it is not legal tender and cannot be considered as a “similar form of payment” because it is not guaranteed by a credit institution.
Digital reality once again precedes legislation, which was foreseen from a static and perhaps analogical perspective of a labor relationship.
In addition, article 26 of the Workers’ Statute allows the payment of salaries in cash or in kind. Remuneration in kind may consist in the use, consumption or acquisition of goods or services free of charge or a discounted item by the worker. As an example, remuneration in kind consists in the private use of a company car or free of charge use of a residence by an employee.
If the payment of salaries by means of cryptocurrency is not possible, could an employer pay its employees using digital currencies under the umbrella of remuneration in kind? Similarly, could we apply the same criteria used for the granting of stock options?
For the time being, we will have to wait until interpretations are provided by our labor courts and tribunals, given the novelty of the issue. Tax implications of the payment of salaries in cryptocurrency or its use for payment in kind will also be relevant.
Departamento Laboral de Garrigues