Some of the best-known people electing to receive their monthly salary in crypto include New York Mayor Eric Adams and Miami Mayor Francis X. Suarez, as well as footballer Leo Messi, who is paid a portion of his salary for playing for Paris Saint-Germain in crypto.

An element of salary or a fringe benefit?

Under the Polish regulations, can employers here also offer to pay workers in cryptocurrency?

Polish law, particularly labour law, can hardly be said to keep up with the dynamic growth in technology, so it should come as no surprise that the national regulations are silent on benefits paid in cryptocurrency. But it may be surprising to learn that Polish labour law does not contain a statutory definition of “remuneration for work.” Based on extensive case law from the Supreme Court of Poland and commentaries in the legal literature, it is accepted that elements of remuneration for work are benefits meeting all the following conditions:

• They are paid periodically by the employer to the employee
• Their payment causes a financial increase on the part of the employee
• They are paid in exchange for work/services performed by the employee based on a contract (legal relationship) between the parties
• Their value reflects the type of work, the qualifications and experience necessary to perform the work, and the quantity and quality of the work.

This means that remuneration for work comprises not only base salary, but also other benefits such as bonuses or commissions. However, other benefits the employee may receive from the employer, not having the characteristics listed above—such as gym memberships, private healthcare, or life insurance—do not fall within the notion of remuneration for work.

This distinction between remuneration for work and other employee benefits is vital for answering the question of whether cryptocurrency is a permissible form of payment for work.

Employee’s wallet protected

The overriding task of labour law is to protect employees. This is evident in the regulations protecting employees’ remuneration. One such regulation is Art. 86 of the Labour Code, which provides that remuneration for work shall be paid in monetary form. This reflects the wording of the Protection of Wages Convention (Convention 95 of the International Labour Organization) from 1949, ratified by Poland, Art. 1 of which defines “wages” as “remuneration or earnings, however designated or calculated, capable of being expressed in terms of money and fixed by mutual agreement or by national laws or regulations, which are payable in virtue of a written or unwritten contract of employment by an employer to an employed person for work done or to be done or for services rendered or to be rendered.” Under Art. 3(1) of the convention, “Wages payable in money shall be paid only in legal tender” (while Art. 3(2) provides, as an exception, for the possibility of paying wages “by bank cheque or postal cheque or money order”).

Under the current regulations in force in Poland, cryptocurrencies are not regarded as a means of payment (money in the legal sense), which means that payment of salary in digital currencies will not meet the requirement of monetary form. This may change in the future, if crypto becomes the currency of any country, i.e. gains the status of foreign currency or other unit of payment recognised and used by the International Monetary Fund for international payments. However, it does not look as if this will happen anytime soon, at least not in Europe.

Nonetheless, there is nothing now preventing a cryptocurrency from being used as a measure of value for determining remuneration payable in fiduciary currency. In light of the significant fluctuations (sometimes by as much as 50%) in the value of cryptocurrencies (with the possible exception of stablecoins such as tether (UST)), in practice not many people decide to use the value of cryptocurrencies for calculating monthly salary. There is also a risk that with a significant fall in value of cryptocurrencies, the remuneration would not meet the requirement of fair payment for the employee’s work, or in the worst case the worker’s salary would not even reach the minimum wage required by law.

Another legal and practical barrier to spread of the use of cryptocurrencies as a form of payment of salary is that the current employment regulations provide for only two forms for payment of salary: by transfer to the worker’s bank account or, at the employee’s request, cash in hand (banknotes and coins).

Crypto-bonus

But this does not mean that cryptocurrencies cannot be applied at all in payments to workers.

While the Polish Labour Code and ILO Convention 95 establish the rule of payment in monetary form, further provisions of these acts permit payment of a portion of remuneration in non-cash form (including in kind). These regulations were enacted with a view to benefits such as coal allowances, but they can also provide a basis for payment of a portion of remuneration in cryptocurrency. However, one barrier here is the condition that payment of salary in a form other than money must be provided for in regulations of labour law (and for now it is not) or in a collective labour agreement. In practice this means that companies where trade unions do not operate will not be able to introduce crypto as a form of payment of employees’ remuneration, as only trade unions can be the party to a collective labour agreement on the part of employees (i.e. a collective labour agreement cannot be concluded with a workers’ council or a representative appointed by the employees for this purpose).

The regulations do not specify what portion of remuneration can be paid in non-monetary form (the ratio of the monetary and non-monetary portions). A draft of the Labour Code which ultimately was not taken up by the parliament included a proposal that the non-monetary portion of an employee’s pay could constitute no more than 10% of the total, which seems too restrictive a limit, particularly in the case of highly paid specialists and management. Considering that the Labour Code and ILO Convention 95 treat payment in monetary form as the rule, and payment in other form as supplementary, it would seem justified that the non-monetary portion of remuneration should not greatly exceed the salary payable in a fiduciary currency. Moreover, in light of the requirement to ensure the employee a salary no lower than the current statutory minimum wage, and considering the significant fluctuations in value of crypto, the employee should receive salary in traditional currency at least equal to the minimum wage in force during the given year.

While these legal requirements might greatly limit the possibility of paying salary in crypto, there are no major obstacles preventing employees from receiving other employee benefits in digital currency. The key is that the practice of awarding such benefits not be framed in such a way that would allow the payment in crypto to be regarded as an element of salary under the criteria discussed above. For example, crypto could be awarded on a discretionary basis by the employer as a prize, or by the employer’s parent company as a retention bonus.

Easier to pay contractors in crypto

The foregoing remarks are applicable to remuneration for work paid to employees (persons hired under an employment contract). Do similar restrictions also apply to persons hired under civil contracts, in particular self-employed persons?

Contractors are not regarded as employees for purposes of labour law, and thus the protective provisions of the Labour Code do not apply to them. Nonetheless, their remuneration is protected under the Minimum Wage Act, Art. 8a(5) of which provides that remuneration, at least in the portion arising from application of the minimum hourly wage (in 2022, PLN 19.70 gross per hour of services), must be paid in monetary form. Otherwise—above the statutory minimum—a contractor may be paid in crypto.

It should be mentioned that, apart from employees, the Minimum Wage Act protects the remuneration only of persons hired under a contract of mandate (umowa zlecenia) or a service contract, but not under a contract to perform a specific work (umowa o dzieło) or an agency contract. The act also includes further exemptions from its protection; for example, the requirement to pay a portion of remuneration in monetary form, discussed above, does not apply to contractors who retain full discretion to decide on the time and place of performance of services and also are paid under a commission system.

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For these reasons, there is some chance for cryptocurrency to be used for paying workers, particularly because in the IT sector (which is the most interested in paying in crypto) the preferred form of cooperation is B2B contracts (a service contract with a person operating an individual business).

Katarzyna Magnuska