Wages in Bitcoin under Swiss Law
The increasing significance of Bitcoin as a long-term investment with monetary features raises the question of whether Bitcoin is suitable to be used as consideration for services rendered and for wage payments under an employment relationship.
Legal basis
According to Article 323b(1) of the Swiss Code of Obligations (CO) wages must be paid in Swiss legal tender, i.e. in Swiss francs (CHF), unless otherwise provided by agreement or custom. In principle, this permits an agreement that wage payments may be made in a foreign currency or even in Bitcoin. The same applies in relation to other cryptocurrencies, provided they qualify as a means of payment. Otherwise, they would constitute a payment in kind.
Risks and limitations
A distinction must be drawn between genuine Bitcoin wages and Bitcoin wages denominated in Swiss francs.
In the latter case, the parties agree that, at the time they are paid out, the wages must be equivalent to a predetermined amount in Swiss francs. In this case, the amount of Bitcoin wages payable is calculated based on the exchange rate at the time the wage payment falls due. With this agreement, it is the employer who bears the risk of exchange rate fluctuations, which is why it is unlikely to pose a problem in terms of employee protection. This applies provided that the employee can freely dispose of the Bitcoin wages paid when the wages fall due and, if required, exchange them for Swiss francs without delay and without encountering any major obstacles.
By contrast, in the case of true Bitcoin wages, i.e. where the payable amount is agreed in Bitcoin, the employee bears the volatility risk. Such an agreement will most likely only comply with an employer's statutory duty of care if the employee actively opts into such an arrangement in full knowledge of all the associated risks.
In particular if all or a key part of the wages is to be denominated in Bitcoin, a prior legal assessment of the specific circumstances is recommended. From an employment law perspective, the payment of voluntary bonuses in Bitcoin or another cryptocurrency should not cause any issues.
Wage deductions and the minimum wage
Even if it is possible to legally agree true Bitcoin wages in particular cases, the social security contributions payable, the payments into the occupational pension scheme and any withholding tax must be settled and paid in the legal currency. This has the potential to lead to considerable additional administrative effort and expense.
To the extent that minimum wage legislation has to be considered, this applies in Swiss francs. Minimum wage provisions for certain industries are contained in collective agreements and in some cases in cantonal laws. The conversion in question would be made at the exchange rate on the day of the wage payment or the due date, and the employer would be under an obligation to assume the volatility risk.
Lastly, employers must bear in mind that they must maintain sufficient liquidity to cover any Bitcoin wages. While, in principle, Article 84 CO stipulates that monetary debts may be discharged in the national currency, this only applies unless explicitly agreed otherwise.