This post has been contributed by Dr Craig Cameron, Senior Lecturer in Corporations Law with the Griffith Business School and a member of the Law Futures Centre. The material and ideas in this blog are drawn, in part, from the article, ‘The regulation of cryptocurrency to remunerate employees in Australia’ 33(2) (2020) Australian Journal of Labour Law 157


Employers may consider using cryptocurrency, a type of digital token, as a method of paying their employees (‘crypto-remuneration’). However, the existing legal framework governing crypto-remuneration can be a risky business for employers. To understand that legal framework, consider an employee’s remuneration package as three general components: a wage or salary, which includes any bonuses and statutory entitlements (e.g. leave, public holidays); superannuation; and non-monetary benefits (e.g. gym membership and motor vehicle). In this post I will discuss the legal framework, as well as two potential methods, albeit untested by an Australian tribunal, that employers may use to pay, or facilitate payment of, cryptocurrency to employees.

A key message underpinning this post is that employers should seek legal and accounting advice before considering any involvement in cryptocurrency payments.

Legal framework

The Fair Work Act 2009 (Cth) (‘FW Act’), which is the legislation governing the rights and obligations of most employee-employer relationships in Australia, requires employers to pay wages ‘in money’ by a prescribed method (s 323(1)(b), FW Act). The issue becomes this: is cryptocurrency ‘money’? Unfortunately, and to the best of my knowledge, the point has not been tested in an Australian tribunal. However, an application of the two main legal methods that have been used to define money—the functional approach and the sovereignty approach—suggest that cryptocurrencies are not money according to labour laws. First, cryptocurrencies do not function as money because their price is volatile (with perhaps the exception of stable coins – see Tether as an example), and they are not a widely accepted medium of exchange. For example, try exchanging your Dogecoin (yes it is a real coin), Bitcoin or Ethereum for groceries at the local Coles or Woolworths! Second, the Australian government has not authorised or issued any cryptocurrency as ‘money’. However, if Australia were to issue a Central Bank Digital Currency (CBDC), which is currently the subject of research by the Reserve Bank of Australia, that CBDC would be authorised by the government and therefore employers could pay staff wages in CBDC because CBDC would be considered ‘money’. Tony Richards, Head of Payments Policy for the RBA, recently said:

However, the Bank acknowledges the argument being made internationally that with all the innovation that is occurring in the payments area, provision of a new digital form of central bank money for general purpose use could be important for safeguarding confidence in national monies and the role of fiat currencies at the heart of monetary, financial and payment systems.

Consequently, the FW Act is likely to treat cryptocurrency as a non-monetary benefit in the employee’s remuneration package. The employer must pay the employee their wage in fiat money as prescribed by a legal instrument (e.g. employment contract, Award, enterprise bargaining agreement) and in the absence of a legal instrument, the National Minimum Wage (currently $772.60 per week).  

While employers cannot pay wages in cryptocurrency, employees can agree, in certain circumstances, to forego their wages in exchange for cryptocurrency as part of a salary sacrifice arrangement. According to the Australian Taxation Office (ATO), this salary sacrifice arrangement is subject to Fringe Benefits Tax (FBT) which is payable by the employer, and by virtue of the employer’s tax liability, may impact the dollar value of the employee’s overall remuneration package. Given the high FBT rate (currently 47%) it is unlikely that employees will pursue this option.

Despite the limitations under labour law of paying wages in cryptocurrency, and tax law for salary sacrificing wages for cryptocurrency, there are two potential methods in which employees may receive cryptocurrency, as outlined below.

Method 1: The employer pays the employee in cryptocurrency after payment by the employer of any required net wages, tax, and superannuation in fiat money   

Under this method, the employer may distribute its own token as remuneration or purchases tokens on a digital currency exchange to distribute to employees. The remuneration package however requires thoughtful contract drafting and tax structuring.

Why can employers potentially apply this method? The reason is that tax and associated superannuation laws are likely to treat the cryptocurrency as a wage whereas labour law is likely to treat the cryptocurrency as a non-monetary benefit. Under labour law, the employment contract could be structured so that the employee’s remuneration package comprises a money wage PLUS cryptocurrency (a non-monetary benefit). On the other hand, the ATO appears to treat any crypto-remuneration, other than as part of a salary sacrifice arrangement, as “normal salary or wages” which means the employer must meets its tax obligations on the Australian dollar (AUD) value of the cryptocurrency paid to the employee (see ATO guidance, ‘Paying Salary or Wages in Cryptocurrency’). Superannuation law is likely to follow the position of tax law on this issue (see my article). 

So how does this method work? Take Kate, a blockchain developer, who is paid a gross money wage of $1,000 per week, which is above the National Minimum Wage, and receives performance-based distributions in cryptocurrency (e.g. bonus, commission, or similar payment). The employment contract would need to include a mechanism for calculating the token entitlement. The employer calculates 10% superannuation and personal income tax on both the money wage and performance-based distribution of tokens (converted into a dollar equivalent amount), withholds total tax from the $1,000.00 gross money wage, and pays the superannuation into a complying fund, as well as the net wage to the employee, in fiat money.

This method exposes the employer to numerous risks associated with its handling of cryptocurrency. First, price volatility risk. Unless the cryptocurrency is a stable coin (beyond the scope of this post), the employer is exposed to changes in the price of the token between its time of purchase by the employer and the time of distribution to the employee. For example, Bitcoin, a heavily traded cryptocurrency, had a 52-week low of US$28,825.76 and a 52-week high of US$68,990.90 as at 9 February 2022. If the employment contract provides that the employee receives tokens calculated according to the token price at the time of payment to the employee, any decline in the token price after the employer purchases the tokens means that the employer is effectively required to distribute more tokens to the employee (and thereby incur a loss). Of course, the opposite scenario on price would work to the employer’s advantage. Risk is both opportunity and hazard for the employer! A second risk is the tax implications of the employer handling cryptocurrency, particularly if the cryptocurrency is not considered by the ATO as ‘trading stock’ used in the ordinary course of business. Capital Gains Tax (CGT) may apply to gains on any ‘disposal’ of cryptocurrency to the employee. A third risk is that the employer will incur labour and software costs in setting up a system for buying, managing, and distributing cryptocurrency to employees. Finally, there is a risk that changes to the law, or a legal interpretation by a tribunal that differs from my own, renders the arrangement non-compliant or tax prohibitive.

Method 2: The employer facilitates the conversion of net remuneration (after tax) into cryptocurrency for distribution to the employee    

This method of receiving cryptocurrency minimises the risks associated with Method 1. The employee’s net remuneration is paid in fiat money to the employee by its placement in an account, and the employer facilitates the conversion of that amount from fiat money to cryptocurrency. For instance, an employee account for receiving money wages may be set up with a third party provider responsible for converting fiat money into cryptocurrency, such as Bitwage or Any costs associated with the conversion may be paid by the employer, or conceivably deducted from the employee’s after-tax wage provided it is authorised by the employee and primarily for their benefit (s 324(1)(a), FW Act). Rather than the employer paying wages in cryptocurrency, which would likely contravene the FW Act, the employer is in effect providing a service, or option, which enables the employee to convert money wages received into cryptocurrency. So going back to Kate’s case in Method 1, the performance-based component of her employment contract would not be distributed as cryptocurrency, but paid in fiat money, and Kate’s net remuneration (after deduction of taxes) would then be converted to cryptocurrency.  

There are media reports of Australian employers offering staff the option of being paid some or all their wages in crypto. It is likely that these employers are not buying and then distributing cryptocurrency to employees.  Rather, the after-tax wage is being paid in fiat money to the employee by virtue of the employee agreeing that their money wage is paid into an account set up by the employer or a third party. The fiat money is then converted to cryptocurrency and distributed to the employee.

Conclusion Can you pay employees in cryptocurrency? It is not a simple answer for employers. The use of cryptocurrency to remunerate employees involves complex tax and labour law issues. Given the risks of managing and distributing cryptocurrency to employees (Method 1), the more likely method of crypto-remuneration is to facilitate the conversion of fiat money wages to cryptocurrency, such as through a third party provider (Method 2). With either option, careful drafting of the employment contract is required.