As an increasing number of employees choose to receive portions of their salary in cryptocurrency, a risky strategy given the volatility of the digital asset classes.
Companies that deal in cryptoassets are prominent among those offering such payment options to their employees, a scenario the Financial Times has compared to the practice of payment in company scrip.
Outlawed in Britain by the Truck Act in 1887, scrip was issued by companies as tokenized payments that could often only be spent as rent on company-owned houses and for food and goods in company-owned stores. Such form of payment would permanently shackle their employees to the company and ensure that all salaries would be spent back with the company.
Given the Choice
Indeed, it would be a good comparison if modern companies were forcing their employees to accept part payment in cryptocurrency.
In the UK, the 1887 Act was superseded by the Employment Rights Act of 1996, which allows employees to choose how they would like to be remunerated.
Crypto-enthusiasts and those willing to take on extra risk appear to be accepting such offers and this has prompted tax authorities around the world – including New Zealand last week – to respond in order to ensure tax loopholes are not exploited.
It remains an obligation upon employers, however, that any form of payment other than ‘coin of the realm’ is purely optional.