To mint NFT art, you need to have enough cryptocurrency in your wallet (and even more to buy it). A successful NFT artist could then also pay his or her studio assistants in cryptocurrency from the proceeds of the sales. Cryptocurrency therefore plays an obvious part in a blockchain-based business. But is this also true from an employment law perspective? Can or should remuneration be paid in a cryptocurrency? Let's take a closer look at this question by examining the interface between the crypto world and the physical world from an Austrian employment law perspective.
Austrian employment law does not explicitly define the term. Case law, however, regards as "remuneration" which the employer grants the employee in return for providing services. "Remuneration" therefore not only includes the regular salary, but also other (non-regular) payments and can generally be split into cash remuneration (Geldbezüge) and remuneration in kind (Sachbezüge).
The employee's remuneration as such must generally be paid to the employee in cash (or by bank transfer – so-called cash payment requirement, Barzahlungsgebot). The background for this rule is that employees should be able to exchange their remuneration freely on the market for goods and services of their choice.
To the extent the applicable collective bargaining agreement does not include regulations on offsetting benefits in kind against the collective minimum salary, remuneration needs to be paid in cash (i.e. in a fiat currency). The parties can agree on supplementary payments in kind (another term is "natural wages") by the employer.
In relation to cryptocurrencies, two questions remain: Is a cryptocurrency a currency under Austrian law, and can employees cover their living expenses if their remuneration is paid entirely in a cryptocurrency?
Cryptocurrency = a currency under Austrian law?
Prevailing doctrine argues that cryptocurrencies cannot be equated with traditional currencies such as the euro or dollar. This is usually justified by the lack of recognition as a payment method and the lack of compulsory acceptance in daily economic transactions. Therefore, cryptocurrencies are (currently) not to be qualified as currencies within the meaning of Austrian law.
Consequently, paying the employees' entire salary in a cryptocurrency would not be compatible with the cash payment requirement. The employees could also not cover their living expenses by (solely) using cryptocurrencies they received as remuneration. At this point, you can't go shopping at the supermarket using cryptocurrencies.
Risk of underpayment
In Austria, there is no legal minimum wage. However, mandatory minimum wages can be set out by the collective bargaining agreement ("CBA") applicable to a business.
It is well known that the price of cryptocurrencies is massively volatile. If employees were paid their entire remuneration in a cryptocurrency, the actual value of their monthly compensation would depend on the exchange rate of the respective cryptocurrency (which could change rapidly).
While employees could benefit from an increase in exchange rates, they could also be impacted by (massive) exchange rate losses. Falling exchange rates could result in the salary suddenly falling below the mandatory collective minimum salary. Underpayment (including due to exchange rate fluctuations) could subsequently lead to considerable financial exposure for the employer. The employer would not only run the risk of employees claiming the difference, but also of authorities imposing fines for wage dumping.
To summarise, paying an employee's entire remuneration in a cryptocurrency is currently not possible from an employment law perspective. Could our artist instead consider incentivising the studio assistants by, for example, paying them a bonus from the proceeds of the sales in cryptocurrency?
Bonuses are considered supplementary payments under Austrian law. A bonus payment can be made as a payment in kind, provided a collective minimum wage is paid in cash. In other words, from an employment law perspective, it is generally permissible for an employee bonus to be paid in the form of a cryptocurrency, if the statutory or collectively agreed minimum remuneration is paid in fiat money.
By Daniel Komarek, Associate and Teresa Waidmann, Counsel, Schoenherr