The Court of Appeal has overturned a decision by the Inland Revenue Department (IRD) that classified Sri Lanka’s national cricketers as employees of Sri Lanka Cricket (SLC) for tax purposes. The ruling this week brings relief to more than 50 contracted male and female players who contested the move, which was initially announced in October 2024.

A two-judge bench, led by Court of Appeal President Justice Rohanta Abeysuriya and Justice Priyantha Fernando, issued the judgment following a comprehensive hearing. Several national cricketers were present in court when the decision was announced.

The dispute arose when the IRD retrospectively reclassified national players as SLC employees, subjecting their income to the Advance Personal Income Tax (APIT) system ordinarily applied to salaried workers. The affected players argued that they were independent service providers rather than employees, as had been recognized under the previous tax framework for many years. Their legal representatives said this retrospectivity also led to contractual payments being withheld from some players for several months.

Counsel Nishan Sydney Premathiratne, representing the male cricketers, stated that the public narrative had misrepresented the players’ position, suggesting they were seeking to evade taxes. He emphasized that the core issue was the inappropriate classification of the players as employees without due consideration of their actual contractual status.

Premathiratne noted that despite being taxed as employees under the IRD’s revised approach, the cricketers had not received employment benefits usually accorded to staff, such as contributions to the Employees’ Provident Fund (EPF), Employees’ Trust Fund (ETF), gratuity payments, annual leave, maternity leave, or retirement benefits. According to Premathiratne, this had been consistent from the time players were first contracted more than 15 years ago.

Legal counsel also highlighted that the contracts between national players and Sri Lanka Cricket include distinct elements not typical of standard employer-employee relationships. These encompass provisions covering broadcasting rights, licensing, and image rights, with contractual fees differing across players and the terms subject to annual renewal rather than automatic extension.

In addition to Premathiratne, Attorneys Shenali Dias and Sidath Gajnayaka appeared for the male players, while President’s Counsel Dr. Harsha Cabral, along with Attorneys Vikum Jayasinghe and Manith Dasanayake, represented the female players. Both groups were instructed by Gamindu Karunansea.

The Attorney General’s Department, representing the IRD, was represented by Deputy Solicitor General Manohara Jayasinghe. Former members of Sri Lanka Cricket opposing the challenge were represented by President’s Counsel Kuvera de Soyza and Attorney Sajana de Soyza, instructed by Sanjay Fonseka.

The Court of Appeal’s ruling effectively restores the classification of national cricketers as independent service providers for tax purposes, overturning the IRD’s attempt to impose employee status and associated tax obligations retroactively.