In August 2019, New Zealand became the first country to legally back organisations paying employees in digital, rather than fiat, currencies.
Crypto wage payment has been happening in South Africa, Australia and Japan for some time, although without explicit support from tax authorities, and NFL football stars in the US recently added their voices to the ‘pay me in cryptocurrency’ movement.
In the UK, staff at Isle of Man-based crypto exchange CoinCorner were recently given the option to receive part, or all, of their salary in the British pound sterling (GBP) equivalent of bitcoin, ethereum, litecoin or XRP.
People can already spend cryptocurrency through certain debit cards, via Coinbase and Wirex for example; being paid in crypto is, therefore, a natural progression.
As interest in this form of remuneration grows, British employers will be eager to understand the risks and practical considerations.
Contractually, the rights and duties in relation to wages are governed by individual contracts of employment. However, if the value of the cryptocurrency falls versus GBP, employers may find themselves in breach of national minimum wage requirements. It is theoretically conceivable to avoid this by paying a portion of salaries in cryptocurrencies, topped up with GBP.
Tax will also need to be deducted at source through pay-as-you-earn (PAYE) from cryptocurrency wages, which may be tricky for self-employed workers.
Practically, payment could be as simple as a wire transfer to existing platforms that provide employees with immediate payouts in cyptocurrency, converted from the wired fiat currency sent by their employer, to a specified storage facility.
Addressing the concerns of both employers and HM Revenue and Customs (HMRC) regarding the mechanics and legality of paying staff in cryptocurrencies will be key to advancing this form of remuneration.
Equally, the feelings of staff who do not want to be paid in cryptocurrencies need to be considered, and it may be that businesses have to adopt more flexible payrolls to account for different preferences.
Tim Bird is a partner at European law firm Fieldfisher