Factual and Procedural Background
Five pilots employed by Company A brought a claim alleging breach of contract after Company A altered benefits payable if a pilot became medically unfit to fly. The claim was dismissed by Judge Wood, and the pilots appealed with permission. [Para 37]
Company A was the successor to earlier airlines, and the pilots’ contractual rights were preserved through employment-transfer legislation where the employer identity changed. Company A and Union A recognised each other for collective bargaining, and the relevant Memorandum of Agreement was signed in 2018. [Para 41][Para 43]
The predecessor airlines had operated a permanent health insurance scheme under which pilots who lost their certification to fly because of illness could receive benefits. The 2015 handbook provided, among other things, benefits until age 65 or state pension age if higher, a partial-incapacity benefit with a proportionate top-up for suited employment, and a 5% annual escalation. [Para 44][Para 49][Para 51][Para 53][Para 54]
Company A became concerned that the scheme had become too expensive, opened negotiations with Union A, and first agreed a replacement scheme that was rejected in a January 2020 ballot. Negotiations later resumed, and in 2021 Company A and Union A agreed a new self-funded scheme, under which legacy claimants under 60 continued existing benefits until 60 and then transferred to the new scheme. The Claimants had all been in receipt of benefits before 16 August 2021, and the court noted that the new scheme could leave them substantially worse off because it did not preserve proportionate benefit or the 5% escalation. [Para 57][Para 61][Para 62][Para 63][Para 65][Para 67][Para 69][Para 73][Para 74]
Legal Issues Presented
- Whether the 2021 replacement scheme validly varied the Claimants’ contractual entitlement to permanent health insurance benefits, notwithstanding the handbook’s “protected benefit” wording. [Para 77][Para 79]
- If the entitlement was not varied, whether the original benefit continued beyond age 65 or state pension age. [Para 78][Para 79]
Arguments of the Parties
Appellants' Arguments
- The Claimants argued that clause 5.1 of the handbook protected benefits already being paid and therefore blocked any reduction through collective bargaining. [Para 105][Para 107][Para 141]
- They relied on authority dealing with accrued benefits and on the wording of the handbook to say that in-claim pilots could not be deprived of protection after age 60. [Para 148][Para 149]
- They also said the reference in the transition provisions to section 5.1 showed that the replacement scheme was meant to preserve the handbook’s protection. [Para 164][Para 165]
- On the age-65 point, they contended that the handbook’s wording was clear and entitled pilots to continue receiving benefits until state pension age. [Para 203][Para 204][Para 217][Para 221]
Respondent's Arguments
- Company A argued that the employment contracts incorporated later collective agreements, so the 2021 scheme was validly adopted through Union A. [Para 120][Para 124]
- It said clause 5.1 only qualified unilateral alteration of the scheme, not a change agreed through collective bargaining, and that no unilateral discretion was being exercised. [Para 103][Para 112][Para 113]
- On age 65, Company A said the handbook’s wording was anomalous and could not sensibly have been intended to extend benefits beyond the age at which pilots could no longer fly commercially. [Para 203][Para 204][Para 211][Para 213]
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Braganza v BP Shipping Ltd [2015] UKSC 17, [2015] 1 WLR 1661 |
Exercise of a contractual discretion may be reviewable for rationality and fairness. [Para 112] |
The court said this was irrelevant because Company A did not exercise a unilateral discretion; the change was made through collective agreement. [Para 112][Para 113] |
| Framptons Ltd v Badger UKEAT/0138/06 |
Union agreement may sometimes permit changes that are disadvantageous to some employees if justified in the bargaining context. [Para 125] |
The court used this only as illustration that unions can agree changes, even if not popular with all affected employees. [Para 125] |
| Malik v Bank of Credit and Commerce International S.A. [1997] UKHL 23, [1998] AC 20 |
Trust and confidence duty argument raised below in relation to collective bargaining. [Para 126][Para 127] |
The court noted the point had been rejected below and was not challenged on appeal, so it said nothing further. [Para 127][Para 128] |
| Tesco Stores Ltd v Union of Shop, Distributive and Allied Workers [2024] UKSC 28, [2025] ICR 107 |
Collective wording making a benefit “permanent” can limit unilateral attempts to remove it. [Para 148][Para 149] |
The court distinguished it because this case involved a collectively agreed variation, not unilateral “fire-and-rehire” action. [Para 149][Para 153] |
| Briscoe v Lubrizol Ltd [2002] EWCA Civ 508, [2002] IRLR 607 |
PHI cases in which employers sought to dismiss employees to deprive them of benefits. [Para 149] |
The court said those authorities were about unilateral employer action and did not assist where the change came through collective bargaining. [Para 149][Para 153] |
| Aspden v Webbs Poultry and Meat Group (Holdings) Ltd [1996] IRLR 521 |
Earlier authority considered in the PHI dismissal line. [Para 149] |
The court treated it as part of the same unilateral-action line of cases and therefore not directly relevant. [Para 149] |
| Amdocs Systems Group Ltd v Langton [2022] EWCA Civ 1027 |
An express contractual promise could not be contradicted by later documents without clear wording. [Para 154][Para 155] |
The court distinguished it because Company A relied on the employment contract’s incorporation term, not on inconsistent external documents. [Para 156] |
| National Union of Rail, Maritime and Transport Workers v Tyne and Wear Passenger Transport Executive [2024] UKSC 37, [2025] AC 1222 |
A trade union is not usually the member’s agent in the strict legal sense in collective bargaining. [Para 174][Para 175] |
The court accepted the judge had used “agency” loosely, but held the wording error made no difference because the real point was collective bargaining, not strict agency. [Para 176] |
| National Coal Board v National Union of Mineworkers [1986] ICR 736 |
Only terms apt for individual contractual enforcement are incorporated into an employee’s contract. [Para 191] |
The court said the PIP terms were plainly apt for incorporation, but the appellants’ real point was instead about whether clause 5.1 prevented later collective variation. [Para 192][Para 194] |
| Hussain v Surrey and Sussex Healthcare NHS Trust [2011] EWHC 1670 (QB) |
Later summary of factors relevant to incorporation of collective terms. [Para 191] |
The court referred to it as part of the background to the “aptness for incorporation” analysis, but found that issue did not decide the real dispute. [Para 191][Para 194] |
| Pelter v Buro Four Project Services Ltd [2022] EAT 105 |
Considered for observations on the nature of PHI obligations. [Para 167] |
The court said it concerned a wholly different issue and did not assist the Claimants. [Para 167] |
Court's Reasoning and Analysis
The court began with the incorporation term in each Claimant’s employment contract, which expressly made the contract subject to the Memorandum of Agreement and its subsequent revisions. In a recognised-union setting, that wording naturally imports later collective agreements as part of the contract. [Para 120][Para 124]
The court held that clause 5.1 of the handbook, read as a whole, qualified only the employer’s unilateral power to modify or discontinue the PHI scheme. The phrase “any such change” was read as referring back to that unilateral power, and the broader context did not justify reading the clause as a carve-out from later collective bargaining. [Para 133][Para 137]
The court rejected the argument that the protected-benefit wording barred collective variation. It said the contractual protection for employees in a collective-bargaining system is that change must be agreed with the union, and the possibility that a union may agree a disadvantageous change is inherent in that system. [Para 120][Para 125]
The court also dismissed the appellants’ reliance on agency terminology, because the judge’s reference to the union as an “agent” was only a loose description and did not affect the substance of the analysis. The key point was that the change was negotiated collectively rather than imposed unilaterally. [Para 174][Para 176]
The court considered the authorities relied on by the appellants, including Tesco, the PHI dismissal cases, and Amdocs, but found them distinguishable because they involved unilateral employer action or contradictory external documents, not a later collectively agreed change incorporated through the contract itself. It also treated the consultation wording, the failed earlier GIP proposal, and the transitional reference to clause 5.1 as insufficient to override the clear wording of Schedule B. [Para 148][Para 153][Para 154][Para 162][Para 164][Para 165]
On the age-65 issue, the court agreed with Judge Wood that the handbook wording was anomalous and best understood in context. The scheme was intended to replace salary lost while a pilot remained in service and could not sensibly have been intended to continue beyond the age at which pilots were no longer permitted to fly commercially. [Para 205][Para 213][Para 214][Para 221]
Holding and Implications
APPEAL DISMISSED. The court held that the 2021 replacement scheme was incorporated into the Claimants’ contracts despite the handbook’s protected-benefit wording, so the age-65 issue did not need to be decided for the outcome. The immediate effect was that the Claimants remained subject to the new scheme; no broader new rule was announced beyond applying established principles of contractual construction and collective bargaining. [Para 199][Para 223][Para 225][Para 227]