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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Crabb & Ors v TUI Airways Ltd [2026] EWCA Civ 988 (29 July 2026) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2026/988.html Cite as: [2026] EWCA Civ 988

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IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
KING'S BENCH DIVISION
HH JUDGE GRAHAM WOOD KC
(sitting as a High Court Judge)
[2024] EWHC 2589 (KB)

		Royal Courts of Justice Strand, London, WC2A 2LL
		29 July 2026

B e f o r e :

LORD JUSTICE MOYLAN
LADY JUSTICE ELISABETH LAING
and
SIR NICHOLAS UNDERHILL
____________________

Between:

	(1) ADRIAN STUART GREVILLE CRABB (2) KRISTIAN DANIEL ALFRED GAVIN (3) SIMON PETER RAWLINSON (4) STUART SNEATH (5) MELVILLE CHARLES BISHOP	Claimants/ Appellants
	- and –
	TUI AIRWAYS LIMITED	Defendant/ Respondent

____________________

Alice Mayhew KC and Matthew Sellwood (instructed by Blacks Solicitors LLP) for the Appellants
Edmund Williams KC and Andrew Edge (instructed by Dentons UK and Middle East LLP) for the Respondent

Hearing dates: 13 & 14 May 2026
____________________

HTML VERSION OF APPROVED JUDGMENT
____________________

Crown Copyright ©

This judgment was handed down remotely at 10.00 am on 29 July 2026 by circulation to the parties or their representatives by e-mail and by release to the National Archives. .............................

SIR NICHOLAS UNDERHILL:

INTRODUCTION

1. The Appellants, who were the Claimants below, are five pilots employed by the Respondent airline, TUI Airways Ltd ("TUI"). Their claim arises out of what are said to be breaches by TUI of their contracts of employment by making adverse changes to the benefits to which they were entitled as a result of medical incapacity. The claim was dismissed by HH Judge Graham Wood KC, sitting as a High Court Judge, in a judgment handed down on 17 September 2024. They appeal against that judgment with permission granted by Bean LJ^[1]. The parties are represented, as they were below, by Ms Alice Mayhew KC, leading Mr Matthew Sellwood, for the Claimants and Mr Edmund Williams KC, leading Mr Andrew Edge, for TUI.
2. A large number of matters, both legal and factual, were in dispute before the Judge, and his judgment, to which I would pay tribute for its clarity and thoroughness, is correspondingly detailed and lengthy. However, the issues before us are purely legal in character and fall within a narrow compass. I can accordingly set out the factual and contractual background comparatively shortly. Those interested in a fuller treatment can readily find it in the Judge's judgment, which is available online with the reference [2024] EWHC 2589 (KB).

THE FACTUAL BACKGROUND

3. TUI is the successor, whether by merger/acquisition or re-branding, to the businesses of a number of older airlines ("the predecessor businesses"), including Britannia Airways and, most recently, Thomson Airways. In so far as those processes involved a change in the identity of the employer, the contractual rights of pilots were preserved by the Transfer of Employment (Protection of Employees) Regulations 1981 and/or 2006.
4. Both TUI and the predecessor businesses recognised the British Airline Pilots Association ("BALPA") for the purpose of collective bargaining as regards the contracts of employment of their pilots. The relevant Memorandum of Agreement ("MoA") between TUI and BALPA was signed on 19 October 2018. It comprises 21 clauses, together with a number of Schedules covering matters of detail. Agreed changes to terms such as remuneration have typically been dealt with by amending the relevant Schedule rather than by entering into a new MoA.
5. Until the developments described below the predecessor businesses, and latterly TUI, had operated a permanent health insurance scheme ("the PHI scheme") under which pilots employed by them were entitled to various benefits if they suffered from health conditions which resulted in them losing their certification of fitness to fly. The Judge set out the origins of these arrangements at paras. 10-20 of his judgment, but I need not summarise them here. I should note that the PHI scheme also provided for benefits for some other classes of employee besides pilots.
6. It was common ground both before the Judge and before us that the relevant statement of pilots' entitlements under the PHI scheme was to be found in a "PHI Handbook" issued in 2015. The principal benefits are fully summarised by the Judge in the passage of his judgment referred to above, but I need only refer to three features:

(1) Duration of benefit. Benefit is expressed by para. 3.1 of the Handbook to be payable, if the employee remained unfit to fly, until they "reach[ed] your 65^th birthday or, if higher, your State Pension Age". Initially cover had expired at "normal retiring age", which was age 60 in the predecessor airlines, but that was replaced by the present formulation in response to the introduction of age discrimination legislation in 2006.

(2) Proportionate benefit. The regulatory requirements as regards pilots' fitness to fly are, for obvious reasons, peculiarly exacting. It is accordingly not uncommon that a medical condition which renders a pilot unfit to fly would not disable them from many other kinds of suitable work – described in the evidence as "suited occupations". The PHI scheme provided for pilots suffering from such "partial incapacity" to receive 37.5% of their pre-incapacity salary (being half of the 75% paid in cases of total incapacity). However, if they obtained employment in a suited occupation, whether with TUI or another employer, they were entitled to a top-up payment known as "proportionate benefit" which was designed to ensure that they would receive more overall than if they continued unemployed. The necessary calculations were complicated, but it is sufficient to say that, depending on the particular circumstances of the employee, proportionate benefit could amount to a very considerable sum.

(3) Escalation. The amount of benefit in payment was increased each year by a fixed rate of 5%.

Those benefits may appear unusually generous, but they reflect the high threshold of fitness required of pilots.

7. Originally, the benefits under the PHI scheme were provided in full through a scheme operated by an insurance company. However, from 2009 at latest payments to pilots over 60 were not covered by the policy, and that liability was self-funded by the airline. Although the Judge heard no evidence about the reason for this change, he inferred that it reflected the fact that the additional premium necessary to obtain cover for pilots following the extension of cover to age 65 – see para. 6 (1) above – was regarded as unaffordable.
8. In the years leading up to 2019 TUI became increasingly concerned by the cost of continuing to provide the PHI scheme. It is unnecessary to give details, but there was a steep rise in the level of premiums being charged by its insurers (at that point Legal & General): this was believed to be the result of increasingly strict regulation of fitness to fly following the Germanwings disaster in 2015 and a correspondingly higher level of claims. The Judge records at para. 37 of his judgment that there was before him no real dispute that premiums had become unaffordable and that change was necessary. TUI opened negotiations with BALPA with a view to agreeing a more affordable arrangement. In late 2019 BALPA agreed a replacement scheme ("the GIP scheme") which did not provide the full benefits payable under the PHI scheme. However, it was a condition of the agreement that the change be approved by the pilots in a ballot. The ballot took place in January 2020, and the agreement was rejected. In the meantime TUI, which had expected the agreement to be accepted, had renewed its cover with Legal & General on the terms of the replacement scheme.
9. The issue was put on the back burner during the early stages of the COVID pandemic. But in due course negotiations resumed between TUI and BALPA, and in summer 2021 TUI reached an agreement with BALPA for the PHI scheme to be replaced by a scheme, known as "Pilots' Income Protection" ("PIP"), based on what is described as "self-funding". Although the pilots were again balloted, the choice was only between two different versions of PIP: they were not given the option of the PHI scheme being retained.
10. The version of the scheme preferred in the ballot was formally agreed between TUI and BALPA with effect from 16 August 2021. The changes were set out by amendments to Schedule B of the MoA (headed "Impaired Health"), and specifically by a new section 3 headed "Pilot Income Protection (PIP)": I will refer to the agreement as "the PIP Agreement". I need only give a short summary of section 3. Paras. 3.1-3.2 give an overview of the scheme, and paras. 3.3-3.4 set out the conditions for eligibility. Paras. 3.5-3.6 are headed "Cover" and distinguish between "legacy claimants" and "eligible new claimants". We are only concerned with the former, who are the subject of para. 3.5. "Legacy claimant" is defined in the definition section of Schedule B as follows:

"Legacy claimant is an existing, pending, or connected claim PHI claimant who has not yet attained the age of 60 on 16th August 2021. Upon reaching the age of 60 a pilot ceases to be a legacy claimant in all circumstances [emphasis supplied]."

Para. 3.5 reads:

"From 16th August 2021, legacy claimants will continue to receive benefits in line with existing PHI arrangements. Upon reaching the age of 60 such pilots will transfer to the PIP scheme provided they remain eligible [emphasis supplied]."

Paras. 3.7-3.26 contain particular provisions relating to benefit. Paras. 3.27-3.31 are headed "PHI to PIP Transition": I will return to these later.

11. The Claimants are all pilots who at various dates between 2017 and 2019, when in each case they were aged under 60, had their certificates of fitness to fly removed or suspended as a result of a medical condition and received benefits under the PHI scheme on the basis of partial incapacity accordingly: three of them took suited employment and were entitled to proportionate benefit. They were all therefore in claim as at 16 August 2021. At the date of the judgment they were aged between 44 and 63.
12. The replacement of the PHI scheme by the PIP scheme does not affect the Claimants until they reach the age of 60, as three of them already have. Up to that age the effect of para. 3.5 of Schedule B (read with the definition of "legacy claimant") is that their benefits under the PHI scheme are preserved. However, as from that point that entitlement ceases and is replaced by entitlement under the PIP scheme (subject to some transitional arrangements). The reason why Schedule B makes that distinction is that the provision of PHI benefits for in-claim pilots up to the age of 60 was covered by Legal & General, whereas thereafter, as explained at para. 7 above, entitlements under the scheme were paid by TUI itself.
13. Exactly how the PIP Agreement disadvantaged, or will disadvantage, the Claimants depends on their particular circumstances, and counsel were agreed that in view of the very specific focus of the issues raised by the appeal it was unnecessary for us to be taken through the various possible permutations. It is sufficient that Ms Mayhew told us that there was potential for significant adverse impact in two main respects – first that the PIP scheme did not provide for proportionate benefit (see para. 6 (2) above), and second that it did not preserve the automatic annual increase of 5% in the rate of benefit (see para. 6 (3)). As I understand it, some other features of the PIP scheme may have had the potential to mitigate that adverse impact, but it is unnecessary to consider to what extent that may have been the case: ultimately, all that matters is that all the Claimants either are, or are at risk of being, substantially worse off as a result of the changes.

THE ISSUES

14. As I have said, the issues before us are far fewer than they were before the Judge. They relate to two findings made by him, as follows:

(1) He held that, on the true construction of the contracts of employment between the Claimants and TUI, the PIP Agreement was effective to vary their entitlement to benefit under the PHI scheme (which he had accepted, contrary to TUI's case before him, was contractual) in accordance with the new Schedule B.

(2) He held that, even if the Claimants' entitlements under the PHI scheme could not be varied, they did not in any event continue beyond the age of 65.

15. The Claimants' grounds of appeal challenge both those findings. I will take them in turn.

(A) THE VARIATION ISSUE

THE RELEVANT CONTRACTUAL TERMS

16. Each of the Claimants had a written contract of employment, either with TUI or with one of its predecessors. In each of their cases, although the precise language differed, the contract contained a provision expressly incorporating into their terms of service the product of any collective agreement between the airline and BALPA. At paras. 6 and 7 of his judgment the Judge quoted two examples, which are in the following terms:

"Subject to Clause 5 below^[2], conditions of service will be in accordance with the Pilot's Agreement between the British Airline Pilot's [sic] Association and Britannia Airways Limited as published from time to time [my italics]. Full details of this agreement are available at the Chief Pilot's office."

…

"This employment is subject to the provisions of a Memorandum of Agreement between the Company and the British Airline Pilots Association. The existing provisions of this Agreement and subsequent revisions thereto [my italics] are deemed incorporated in your terms and conditions of employment. A copy of the Memorandum of Agreement may be seen on request prior to your date of commencement. Your own personal copy will be provided to you after you have joined the Company."

The Judge proceeded on the basis that those formulations (and any others to which he did not specifically refer) were in the relevant respects to substantially the same effect; and in practice he referred thereafter only to the second, to which I will refer as "the incorporation term". That approach was not challenged before us.

17. Although the Judge reviewed the earlier history, I need only refer to the MoA which was current immediately prior to 16 August 2021. Para. 10.2 reads:

"The Company maintain a Permanent Health Insurance (PHI) policy for pilots, details of which will be provided by the Pilot Management Team."

(Evidently some such word as "shall" is missing before "maintain".)

18. At para. 9 of his judgment the Judge notes that the MoA gives no further details of the PHI policy in question. However, he goes on to record that:

"It is common ground that on request a pilot, whether on sick leave or on active duty, would receive from the pilot manager a PHI handbook as well as other documentation which dealt with an ancillary yet important aspect of PHI to which a pilot who was medically unfit was entitled, A guide to proportionate benefit. This material could also be downloaded from the company intranet."

As already noted, there was an issue before the Judge whether the terms of the PHI Handbook and the "guide to proportionate benefit" formed part of the Claimants' contracts of employment. At paras. 239-246 of his judgment he held that they did. That conclusion is not challenged before us.

19. Although, again, the Judge reviewed the earlier history, the version of the PHI Handbook which is relevant for our purposes is the version issued in 2015. We are not here concerned with its description of the substance of the benefits. The crucial provision for our purposes is para. 5.1, which reads:

"5.1   Can the Plan be altered or discontinued?

Your Company and the Plan Manager^[3] hope to continue the Plan indefinitely, but must necessarily reserve the right to modify, suspend or discontinue the Plan if future conditions, in their opinion, warrant such action, subject to employee consultation as appropriate. Benefit already being paid at the date of any change will continue and will therefore not be affected by any such change."

It is important to note that what the first sentence of para. 5.1 does is to give TUI the right to vary HREF='#note4'>^[4] or discontinue the PHI scheme unilaterally (albeit "subject to employee consultation as appropriate"): to anticipate, such a right is quite different in character from a right to vary it by agreement, whether arrived at collectively or with a particular individual. The effect of the second sentence is at the heart of the issue before us, and I will return to it later.

THE JUDGE'S DECISION

20. It was TUI's case that the incorporation term operated to substitute the terms of the new Schedule B in the MoA for the Claimants' previous rights under the PHI scheme. The Claimants contended that that was inconsistent with the second sentence of para. 5.1 of the PHI Handbook, the effect of which was to preserve benefits already in payment in the case of any change to the PHI scheme: the Judge referred to this as the "protected benefit clause", and I will for convenience sometimes do the same.
21. The Judge rejected that argument. He held that the second sentence of para. 5.1 operated only as a proviso to the first sentence, and thus only where the unilateral right conferred by that sentence was exercised and not where, as here, a change is made by way of a collective agreement reached with BALPA. At para. 259 of his judgment, having summarised his previous finding that the terms of the Handbook had contractual effect, he continued:

"It is then necessary to consider whether by a process of collective bargaining between TUI and BALPA, those terms were changed, whereby the in-claim pilots would transition to PIP after the age of 60. Here, once again, the focus is paragraph 5.1, because the primary argument of the Claimants is that the protected benefit clause provided a 'carve-out' from the collective bargaining process. Both sets of counsel have pursued compelling arguments, and I have not found this an easy issue to resolve."

At para. 260 he observed that "the starting point … is not the Claimants' protected benefit clause in 5.1, but the employer's right to modify etc". He acknowledged that any exercise of the unilateral right to modify the PHI scheme, which conferred a discretion on TUI, would be reviewable in accordance with the line of authority deriving from Braganza v BP Shipping Ltd [2015] UKSC 17, [2015] 1 WLR 1661. But, he said:

" …[T]hat is not what happened in this case. In my judgment, there was no discretion exercised by the employer, but a process whereby the employees' representatives were invited to agree to changes which would impact on their benefits, both those who were in claim, and those who might claim in the future."

He continued, at paras. 261-262:

"261. The juxtaposition of the two provisions (the employer's right to vary or modify and the employee's right to preserve benefits already being paid) is relevant in this context. As Mr Williams KC has pointed out, and in respect of which there is no real challenge, most of the Claimants accepted that they could have agreed individually to a variation in the PHI benefit which they were receiving, and this would not have amounted to an imposition of changed terms. The real question is whether or not a collective agreement to such a variation was permissible when none of the in-claim pilots had themselves agreed or consented to changes.

262. In my judgment, this is answered by reference to the contracts of employment of each of the pilots, including the relevant MoA. The consensual variation was validated by the creation of a collective agreement in respect of which each employee had agreed would be incorporated into their individual contracts. If the provision in paragraph 5.1, furthermore, which purported to protect benefits which were being paid both pre-and post-60, had been intended to provide a carve-out from any future collective agreement, thus nullifying the provision in the contracts of employment which allowed for incorporation, specific wording to this effect might reasonably have been expected."

22. In short, the Judge's conclusion was that the protected benefit clause applied only to the exercise by TUI of the right of unilateral variation conferred by the first sentence of para. 5.1, and not to its right to negotiate a variation by way of collective bargaining with BALPA.

DISCUSSION AND CONCLUSION

23. It will be most convenient if I start by saying that in my view the Judge was right, giving the reasons why I take that view, before proceeding to address the Claimants' specific grounds of appeal. My reasons can be stated fairly shortly.
24. The starting-point, as the Judge correctly pointed out at para. 260 of his judgment, must be the incorporation term in the Claimants' contracts of employment. That unequivocally imports into those contracts any terms agreed by TUI and BALPA (subject to their "aptness for incorporation", which I consider below); and it does so not only as regards terms agreed at the date of the contract but as regards subsequent variations. Such provisions are of course standard, and indeed necessary, in circumstances where an employer recognises a trade union for the purpose of collective bargaining.
25. The incorporation term itself does not expressly qualify the kinds of variation to which it applies – more particularly, it does not limit it to variations in the employee's favour – and I see no justification for implying such a limitation. The protection for the employee is that any variation can only be achieved by agreement with the trade union, and it would be very unusual for a union to agree to a diminution in the rights of the employees whom it represents, either collectively or in the cases of particular individuals or groups. Having said that, there will sometimes be situations where a union is prepared to agree to such a change, for example where it recognises that the viability of the business would otherwise be imperilled or where it judges that the disadvantages are outweighed by other beneficial changes: see the observations at para. 42 of the judgment of Elias P in Framptons Ltd v Badger UKEAT/0138/06. That may not be a popular course for the affected employees, particularly where the disadvantages and/or any countervailing benefits do not apply to all employees equally; and for that reason a union may, as a matter of choice or in conformity with its own rules, only agree to the changes in question after they have been approved in a ballot. Whether there is a ballot or not, employees who feel themselves disadvantaged by a collectively agreed variation to their contractual rights may feel aggrieved with the employer for proposing the change and/or with the union for agreeing to it; but that possibility is inherent in any system of collective bargaining.
26. I should mention in this connection that it was part of the Claimants' case before the Judge that the so-called "trust and confidence duty" (i.e. the duty recognised in Malik v. Bank of Credit and Commerce International S.A. [1997] UKHL 23, [1998] AC 20) required TUI to "carry out the process of collective bargaining reasonably, rationally and fairly" and that it had breached that duty in various respects. The alleged breaches were mostly of a procedural nature, but they included a contention that a failure to provide in the new arrangements for the protection of the position of in-claim pilots after the age of 60 was itself a breach of the term. The Judge rejected that case on the facts, and that decision was not challenged before us. That being so, I will say nothing about its viability in principle, but it is worth noting that in connection with it TUI called as witnesses two BALPA officials, including Mr Christophe Godesar, who was its Chair at the relevant time. It is clear from the judgment that it was their evidence that BALPA believed that the PIP Agreement was in the interests of the pilots as a whole, notwithstanding that it was aware of the concerns of the in-claim pilots about their position after age 60. As the Judge put it at para. 285:

"… [I]t was open to the representatives of the in-claim pilots to acknowledge the unique position in which they found themselves and to seek to negotiate some form of protection. BALPA chose not to, because it was considered that the basic elements of the new scheme provided advantages for the vast majority of pilots, even though some may potentially lose out."

He also pointed out elsewhere that particular criticisms of the process of negotiating the new arrangements which were advanced by the Claimants were in reality criticisms (whether justified or not) of BALPA and not of TUI: see, e.g., paras. 292, 295 and 297 of his judgment.

27. The question thus is whether the effect of the incorporation term, as set out above, is qualified by the second sentence of para. 5.1 of the PHI Handbook, i.e. the "protected benefit clause". I do not believe that it is. The paragraph must be read as a whole. The first sentence, as we have seen, confers on TUI a right of unilateral variation. As a matter of the structure of the paragraph, the only natural reading of the second sentence is that it is intended to operate as a qualification to that specific right.
28. That construction gains some support from the reference at the end of the sentence to "any such change", which in my view most naturally refers to a variation of the kind permitted by the first sentence. Ms Mayhew pointed out that as a matter of syntax "such" should refer back to the word "change" earlier in the sentence, and that that word is not itself expressly linked to the first sentence. I accept that that is strictly the case, but I am inclined to think that the more natural reading is still that it refers back to the first sentence. In any event, even if I am wrong about that, it does not affect my reading of the effect of the second sentence as a whole based on its context in the paragraph.
29. There are in my view no broader contextual considerations which would lead to a different construction. A specific protection for employees who are already in claim makes obvious sense in the context of a right of unilateral variation, but it is much less obvious in the context of an agreed variation, where a party has the fundamental protection that they do not have to agree to anything. As the Judge pointed out, it was accepted that the protected benefit clause could not have precluded the Claimants as individuals from agreeing to a diminution in their rights as in-claim pilots. It is true that in the context of collective bargaining the relevant consent is given not by individuals but by the recognised trade union, and that accordingly an individual might find themselves bound by a change with which they do not agree; but, as discussed above, that is a risk which is inherent in collective bargaining, and there is nothing in the context to suggest that the Handbook is concerned with such a situation.
30. Against that background I turn to the four grounds of appeal which are relevant to this issue.

Ground 1

31. This reads:

"The learned judge wrongly held that clause 5.1 of the PHI Handbook applied only to unilateral changes made to the Appellants' contracts of employment and therefore did not apply to collective bargaining."

I have already given my reasons for believing that the Judge was right, but I should address a number of particular points made by Ms Mayhew under this head in support of her challenge to his conclusion.

32. First, she emphasised that the circumstances contemplated by para. 5.1 were very far-reaching, expressly including the wholesale discontinuance of the PHI scheme. That is true, but I do not see how it assists her on the point which we have to decide, which is, rather, whether the protected benefit clause qualifies the otherwise unlimited scope of the incorporation term. I accept that if it does not then pilots are in theory at risk of BALPA agreeing to the wholesale withdrawal of incapacity benefits (though that is not of course what happened here); but that theoretical risk does not justify the conclusion that the parties cannot have intended that pilots should trust their union to reach the agreements with the airline that it judges to be in the best interests of the bargaining group which it represents.
33. Second, she took issue with the Judge's observation at the end of para. 262 that if the second sentence of para. 5.1 had been intended to provide a "carve-out" from the effect of the incorporation term specific wording to this effect might have been expected. She submitted that, on the contrary, what would require to be expressly spelt out was a provision that the benefits of in-claim pilots under the PHI scheme could be removed by agreement with BALPA. But this sort of point rarely advances the argument: issues about construction generally only arise because the contract does not expressly provide for the case which has arisen. For the reasons which I have given I believe that the natural reading of the protected benefit clause is that it applies only in cases of unilateral variation, and I do not regard the fact that pilots may occasionally be disadvantaged by negotiating judgments made by their trade union as so surprising that it would need to be spelt out.
34. Third, she relied on the recent decision of the Supreme Court in Tesco Stores Ltd v Union of Shop, Distributive and Allied Workers [2024] UKSC 28, [2025] ICR 107. In that case a collective agreement between the employer and the union contained a term affording to a class of employees a benefit called "retained pay", which was described as "permanent". The employer subsequently sought to remove that benefit by dismissing the employees who enjoyed it, relying on the standard express right to dismiss them on notice, and offering them employment on new terms which did not include the right to retained pay. The Supreme Court held that on the true construction of the contract of employment the employer was not entitled to exercise the right to dismiss on notice where the purpose of doing so was to circumvent the express term that the benefit in question would be permanent. The reasoning in the judgment of Lord Burrows and Lady Simler (with which the other members of the Court agreed) depended on it being inconceivable that the parties can have intended that the employer could circumvent the grant of the agreed benefit on a permanent basis by the use of the "fire-and-rehire" mechanism. Ms Mayhew drew our attention to paras. 38-42 of the judgment, where that point is made, and also to paras. 51-56, which draw support from the cases where the Court had held that it was unlawful for an employer to dismiss employees in order to deprive them of the benefit of PHI (see Briscoe v Lubrizol Ltd [2002] EWCA Civ 508, [2002] IRLR 607, reviewing the case-law following Aspden v Webbs Poultry and Meat Group (Holdings) Ltd [1996] IRLR 521). But both Tesco and the PHI authorities are concerned with cases where the employer has sought to take unilateral action – that is to say, dismissal – to deprive the employee of an accrued benefit. We are here concerned with a fundamentally different situation, where the diminution in the Claimants' benefit is the result not of unilateral action but of agreement with the recognised trade union. At the core of the reasoning in Tesco is the proposition that it was inconceivable that the parties, and more particularly the union, could when negotiating the collective agreement have intended that the rights in question could be unilaterally removed by the employer in the way that it was seeking to do. But in this case the outcome which the Claimants challenge (which does not involve the total removal of the relevant benefit) is one to which their union explicitly agreed. I can therefore find nothing of assistance in Tesco or the cases referred to in it.
35. Fourth, Ms Mayhew referred us to the decision of this Court in Amdocs Systems Group Ltd v Langton [2022] EWCA Civ 1027. In that case the claimant was an employee who was on long-term sick leave and receiving payments under an income protection plan provided by insurers. The summary of the plan which he received with his original offer letter said that the benefits would be increased annually by 5%: this was referred to as "the escalator provision". In the event the insurers had discontinued that provision before the claimant's absence began, and the escalator was not applied to his benefits. The only issue on the appeal was whether the summary had contractual effect, which it was held that it did. Ms Mayhew relied on para. 57 of the judgment of Bean LJ (with whom the President of the Family Division and Elisabeth Laing LJ agreed) which was concerned with an argument based on a statement in the summary that the operation of the schemes was governed by the terms of the insurance policy and that "nothing in this summary will override the terms of that document" in it. Bean LJ held that that was not sufficient to contradict the express statement in the summary of the escalator provision. He said:

"If there was something in the insurance documents as they stood in July 2003 which contradicted the express promise in the contractual documents this should have been brought expressly and unambiguously to the Claimant's attention."

That of course is quite different from the issue in this case. TUI is not seeking to rely on anything in the underlying insurance documents (which in any event did not apply after the age of 60), or any other non-contractual documentation, to contradict the terms of the contract of employment. On the contrary, they are relying on the incorporation term in the contract of employment to permit them to modify by agreement with BALPA a previous term which likewise derived from a collective agreement.

36. Fifth, she submitted that the provision in the first sentence of para. 5.1 that the right to vary the scheme was to be "subject to employee consultation as appropriate" was a reference to collective bargaining, and that it was accordingly highly significant that no such reference appears in the second sentence. I cannot agree. In ordinary industrial relations language consultation and negotiation by way of collective bargaining are well recognised as different things.
37. Sixth, Ms Mayhew referred to what she said was the Judge's finding that in the previous abortive agreement between BALPA and TUI providing for the GIP scheme (see para. 8 above) pilots in the Claimants' position would continue to receive their benefits under the PHI scheme after the age of 60. She submitted that that showed a common understanding that it was necessary to preserve the rights of existing in-claim beneficiaries and that that should have led the Judge to conclude that the same understanding underlaid the agreement concluded in August 2021. The finding in question (at para. 38 of the judgment) is rather compressed, but I will assume that it is to the effect alleged. However, I cannot see that that assists the Claimants. Whatever may have been the position under the GIP scheme, it is clear from Schedule B what was agreed in the PIP Agreement.
38. Seventh, she referred us to para. 3.27 of Schedule B, which is the first paragraph under the heading "PHI to PIP Transition" (see para. 10 above). This reads:

"In accordance with section 5.1 of the PHI Handbook, a legacy claimant's achieved escalated reference salary will continue and will therefore not be reduced. A legacy claimant will continue to receive escalated benefits."

Her point is that the explicit reference to para. 5.1, in the context of the protection of a benefit – namely the right to "escalation" (see para. 6 (3) above) – only makes sense if the new Schedule B is intended in some way to conform to, or incorporate, the protection of benefits provided for in the second sentence. I would accept that up to a point: that is, it seems clear that the drafters of the Memorandum believed that by preserving the right to escalation they were giving effect to the protected benefit clause. But I do not believe that that assists the Claimants. Para. 3.27 in terms only relates to legacy claimants, who are by definition under the age of 60, whereas it is quite clear from para. 3.5, and evidently fundamental to the scheme of section 3, that in-claim pilots over the age of 60 are only entitled to benefits under the PIP scheme. I accept that on a strict analysis it was unnecessary, and indeed logically wrong, for Schedule B to refer to the protected benefit clause in para. 5.1 at all if, as I would hold, it only applied in the case of a unilateral variation; but it is not entirely surprising that the drafters should have found it natural to refer to it in an instance where they were in fact preserving a benefit from the old regime. In any event whatever anomaly may remain is in my judgment an insufficient basis for disregarding the clearly expressed intention in para. 3.5 that legacy claimants should cease to enjoy any PHI benefits as from age 60.

39. Finally, Ms Mayhew argued that the different treatment of in-claim pilots before and after the age of 60 was unprincipled. Although the practical reason for the difference was that the provision of benefits to those over 60 was not (and indeed had not been for many years) covered by insurance, that was a matter of indifference to the pilots, who naturally and rightly treated TUI as responsible for providing the benefits in question. That may be so, but I cannot see how it affects the issue which we have to decide. The fact that TUI was uninsured as regards PHI benefits for pilots over 60 does not of course justify breaching their contracts of employment by reducing those benefits, but that is not its case: the point is relevant only as background to explain why it sought to agree a change in those contracts. The issue for us is whether the agreement that it reached with BALPA was effective to do so. (I should note for completeness that in connection with this point Ms Mayhew referred us to paras. 60-64 of the judgment of HH Judge Tayler in Pelter v Buro Four Project Services Ltd [2022] EAT 105. That passage addresses the nature of the obligations undertaken by the employer who provides access to a PHI scheme but in the context of a wholly different issue; and I have been unable to see how it assists her case.)

Ground 2

40. This ground reads:

"The learned judge wrongly held that the Appellants' trade union acted as agent for the Appellants when engaging in collective bargaining [paragraphs 264 and 278]."

41. The Claimants are correct that in para. 264 the Judge does indeed refer to BALPA as having agreed to the changes in Schedule B as "the pilots' acknowledged agent" and that in para. 278 he refers to them as "consensual changes through the agency of the union". Ms Mayhew submitted that this was a plain error of law, since it is well-established that under collective bargaining arrangements a trade union does not in the usual sense negotiate as an agent for the members of the bargaining group: see, most recently, the observations of Lord Leggatt and Lady Simler in para. 40 of their judgment (with which the other members of the Supreme Court agreed) in National Union of Rail, Maritime and Transport Workers v Tyne and Wear Passenger Transport Executive [2024] UKSC 37, [2025] AC 1222.
42. I accept that the Judge was formally in error to use the language of agency on these two occasions, at least if he intended to use it in its strict sense^[5]. But the error made no difference to his substantive analysis. The essential point for the purpose of his reasoning was simply that the variation was effected using the mechanism of collective bargaining and not unilaterally.

Ground 3

43. This ground reads:

"The learned judge wrongly held that a collective agreement between the Appellants' trade union and the Respondent amounted to a consensual variation of the Appellants' contracts of employment [paragraph 262]".

(Para. 262 of the judgment is set out at para. 21 above.)

44. Ms Mayhew's point is that a variation in the terms of an employee's contract of employment effected by collective bargaining cannot properly be described as "consensual". Apart from again making the point that the union does not act as the employee's agent, she relied on observations in the judgments of Lord Burrows and Lady Simler (para. 40) and of Lord Leggatt (para. 110) in Tesco (above) addressing a provision in the collectively agreed contracts of employment that "retained pay can only be changed by mutual consent". In both judgments that language was interpreted as requiring the consent of the individual employee, and as having been included specifically in order to guard against the risk of the right being negotiated away in subsequent collective bargaining. However, that is a conclusion about the meaning of a particular contractual provision, not a proposition that a collectively agreed term cannot in any context or for any purpose be regarded as consensual. In the context in which the Judge was using it in para. 262 – namely that the new Schedule B was arrived at by collective bargaining rather than unilaterally – the label is entirely unexceptionable.
45. I would add that Mr Williams made the point that the reasoning of the Court in Tesco appears to proceed on the basis that the right to retained pay could in principle have been removed by later collective agreement, notwithstanding that it was described as "permanent", but that that possibility had been expressly excluded by the mutual consent clause, for which there was no equivalent in the present case.

Ground 4

46. This ground reads:

"The learned judge failed to consider the aptness for incorporation of the PIP scheme to the Appellants' existing contracts of employment and, instead, considered it to be automatically incorporated into those contracts [paragraph 262]."

47. Although the ground refers to "aptness for incorporation", Ms Mayhew's submissions as developed in her skeleton argument and orally did not really depend on this concept. The point that a provision of a collective agreement will only be incorporated in an employee's contract of employment if it is "apt for incorporation" appears to have emerged first in National Coal Board v National Union of Mineworkers [1986] ICR 736, where the distinction was between terms which confer individual rights and terms which seek to regulate relations between employer and union at the collective level: the former were "of their nature apt to become enforceable terms of an individual's contract of employment", whereas the latter were not (see pp. 772-773 of the judgment of Scott J). Later cases have introduced a wider range of considerations, helpfully summarised by Andrew Smith J at para. 168 of his judgment in Hussain v Surrey and Sussex Healthcare NHS Trust [2011] EWHC 1670 (QB), but they are all nevertheless focused on whether the provision in question is "of its nature" the kind of term that might be expected to give rise to rights enforceable by an individual employee.
48. The provisions of Schedule B were plainly of their nature "apt for incorporation" into the Claimants' contracts of employment. They provided for pilots who were not fit to fly to receive a series of defined benefits of a nature which were on any view appropriate for individual enforcement, just as were the previous rights which they replaced. Ms Mayhew's argument was not about that at all. Rather, as expressed at para. 43 of her skeleton argument, it was that since

"… the purpose and plain interpretation of clause 5.1 is that it is to prevent the variation of the existing terms, it would be entirely purposeless if it could simply be overridden by implication through the incorporation of an agreement to which the employee was not a party."

On analysis, that is a submission that the incorporation term did not, on its true construction, permit any variation of existing terms of employment which, on their true construction, were intended to be immune from variation by means of collective bargaining. That is simply another way of putting the points which I have already considered at paras. 24-29 above, and for the reasons which I give there I do not accept them. In short, I believe that the protected benefit clause in para. 5.1 is concerned only with unilateral variation; and there is no reason to imply any limitation on the operation of the incorporation term such as to preclude changes of the kind which occurred in the present case being introduced as a result of a collective agreement.

Conclusion on the Variation Issue

49. For the reasons given above I believe that the Judge was right to hold that the changes to Schedule B of the MoA contained in the PIP Agreement were incorporated into the Claimants' contracts of employment notwithstanding the protected benefit clause in para. 5.1 of the PHI Handbook.
50. It follows from that conclusion that the age 65 issue does not arise for determination, but I will nevertheless briefly state my views on it.

(B) THE AGE 65 ISSUE

51. It will be recalled that para. 3.1 of the PHI Handbook provides that entitlement to the benefits under the scheme will continue until the employee reaches the age of 65, "or, if higher, your State Pension Age". The same formula is also to be found in two places in para. 2 of the Handbook. State pension age rose from 65 to 66 in November 2018 and under current legislation will increase to 68 in the case of at least some of the Claimants.
52. On a literal reading, that language clearly provides that pilots qualifying for benefits under the PHI scheme would continue to receive them until state pension age. However, it is TUI's case that that literal reading cannot be what the parties intended, since pilots were at all material times prohibited by EU civil aviation rules from flying commercially after the age of 65. The aim of the PHI scheme as regards pilots is, and is only, to compensate them for the loss of income caused by their being unable to fly as commercial pilots, and it would make no sense for the benefit to extend beyond the age when they would not be entitled to do so in any event. It says that the reference to "state pension age" is explained by the fact that the PHI scheme applied to other classes of employee suffering medical incapacity who would, unlike pilots, have otherwise been entitled to continue to work until state pension age: it is accepted that the references in question appear in passages applying only to pilots, but it is said to be unsurprising that a formula which was appropriate in other parts of the Handbook should have been carelessly applied in circumstances where it was inappropriate.
53. The Judge accepted TUI's case. At para. 254 of his judgment he says that the construction contended for by the Claimants

"… cannot have been within the intention of the parties. Apart from the fact that it makes no commercial sense to provide a benefit to cover a salary shortfall which could not have been earned in the absence of sickness or incapacity, the historical nature of this benefit and the overall application of the handbook to all TUI employees cannot be ignored."

He goes on at paras. 255-256 to address some particular factual points, but it is sufficient to quote from para. 257 as follows:

"It seems to me that this provision is entirely anomalous and the most likely explanation, as provided by Mr Dunk [one of TUI's witnesses] is that whilst earlier versions of [the Handbook] referred to normal retirement age, being 65 for a pilot, the effect of anti-discrimination legislation, and increased [state pension age] which would clearly have application to other TUI employees, led to the formulation of these paragraphs which were subsequently corrected. In my judgment it is sufficient to consider this potential contractual provision by reference to the intention of the parties and the aptness of the term. The intention of the parties is expressed most clearly in the opening words of paragraph 3.1:

'The Plan aims to provide you with a regular income benefit while you remain in your company's service. This benefit is designed to act as a replacement [Judge's underlining] salary.'

This is what had been expected by pilots who are no longer able to fly and the windfall of a benefit extended beyond their normal flying age made no contractual sense. Thus it would fail to pass the test of being a term apt for incorporation."

54. For the reasons given at paras. 47-48 above I do not find the concept of "aptness for incorporation" relevant in this context. But the factors deployed by the Judge are capable of justifying his conclusion as a straightforward piece of contextual construction, and I believe that it was correct on that basis.
55. Grounds 5-7 of the grounds of appeal challenge the Judge's reasoning on this issue. Grounds 5-6 were supported before us in oral submissions by Mr Sellwood, but he sensibly accepted that ground 7 did not in fact arise if, ex hypothesi, the Claimants had succeeded on the variation issue.
56. Ground 5. The essential point made in this ground is that it was impermissible to override the plain meaning of the language of the Handbook by reference to commercial common sense. I quite agree that the concept of commercial common sense is to be used with caution, but in this case the Judge's reasoning does not depend simply on that concept. Rather, it was his case that the extension of benefit beyond age 65 in the case of pilots contradicted the express purpose of the scheme: see his reference to para. 3.1 of the Handbook.
57. Ground 6. Mr Sellwood described this as the main ground. He initially sought to challenge the Judge's references to aptness for incorporation, but when he was invited by the Court to address the essential point that the continuation of benefit after age 65 was inconsistent with the explicit purpose of the PHI scheme, namely to replace salary lost as a result of a pilot being unfit to fly, he submitted that there was no fundamental inconsistency because the scheme only replaced 75% of salary (or 37.5% in the case of partial incapacity): extending benefit beyond the age at which the loss was suffered could be regarded as a "trade-off" which recognised that fact. I am unpersuaded by that. The benefit is plainly intended to represent the loss, and only the loss, suffered in the period during which the pilot would, but for his incapacity, have been flying; and the fact that it does not do afford complete compensation for that loss cannot found a conclusion that the parties intended to provide for benefit to continue in respect of a later period.

DISPOSAL

58. For those reasons I would dismiss the appeal.

Elisabeth Laing LJ:

59. I agree.

Moylan LJ:

60. I also agree.