Cryptocurrency as part of renumeration
Update Employment Law April 2025
Background
According to a new decision by the Federal Labor Court (Bundesarbeitsgericht - BAG) (judgment of April 16, 2025, 10 AZR 80/24; PR No. 17/25), wages can also be paid in cryptocurrencies. The prerequisite is that the unseizable amount of the work compensation is paid to the employee in money.
Facts of the case
A former employee of an online marketing company, which deals with cryptocurrencies among other things, sued for the transfer of the cryptocurrency Ether (ETH). Her employment contract stipulated that her commission claim would first be calculated in Euros. This amount was then to be converted into ETH at the current exchange rate and transferred to the employee on the due date of the commission. Although the employee repeatedly requested payment from her employer, no transfer of ETH took place until she left the company. Finally, she was paid part of the commission in Euros. When she sued for the rest – in Ether – the employer argued that paying commissions in the form of cryptocurrency was inadmissible and that all claims had already been settled in Euros. With her lawsuit, the plaintiff last demanded commissions amounting to 19.194 ETH for the months of February and March 2020.
Reasons for the Decision
As the previous instance already held, the BAG also considers the agreement on remuneration in cryptocurrency to be permissible as remuneration in kind in accordance with Section 107 of the German Trade Regulation Act (GewO). Although a "cryptocurrency" is not "money" as required by Section 107 (1) GewO. However, Section 107 (2) sentence 1 GewO generally allows non-cash benefits to be agreed upon as part of the renumeration if it is in the interest of the employee. The agreement of remuneration in cryptocurrency was deemed to be in the interests of the plaintiff and in line with the nature of the employment relationship.
However, according to Section 107 (2) sentence 5 GewO, the value of the agreed non-cash benefits may not exceed the amount of the seizable part of the work compensation. The employee should not have to "exchange" the non-cash benefit into Euros or even claim social benefits in order to cover his living expenses. A breach of this provision leads to the partial nullity of the agreement if the non-cash benefit, such as the ETH unit in this case, is divisible. This means that the remuneration must be paid in cash up to the amount of the respective seizure exemption limits, and the non-cash benefit must be reduced accordingly.
As the lower court had not correctly determined the seizure exemption limits in the specific case, the matter was referred back to the Regional Labor Court (LAG) Baden-Württemberg for a new hearing and decision. As the value of the ETH has increased significantly in the meantime, the expected judgment could be a real windfall for the employee. If the employer had procured the ETH at the intended due date and fulfilled its obligation on time, it would not now be burdended with the exchange rate risk.
Notes for the practice
In the case in dispute, the BAG did not have to decide whether and, if so, under what conditions an agreement in general terms and conditions is effective, according to which a claim to remuneration is to be fulfilled by transferring units of a cryptocurrency. The plaintiff has invoked the validity of the agreement; the employer, as the user of the clause, cannot invoke its invalidity. The content review does not serve to protect the user of the clause from the form provisions it has created itself. Particular care is therefore required when contractually agreeing remuneration in the form of cryptocurrency in order to meet the requirements of the general terms and conditions review.
The little-known provision of Section 107 (2) GewO and the limit of the seizable part of the work compensation to be observed also apply to other non-cash benefits, such as the provision of a company car for private use (cf. BAG, judgment of May 31, 2023 – 5 AZR 273/22). If the value of the agreed non-cash benefit exceeds the amount of the seizable part of the remuneration, this leads to the partial invalidity of the remuneration agreement. As a result, the claim to remuneration in the amount of the value of the non-cash benefit is not fulfilled and the employee instead is entitled to payment of the amount of money.
If non-cash benefits are involved, it must therefore be checked and ensured in each individual case that the value of the non-cash benefit does not exceed the amount of the seizable part of the remuneration.
