Adrian Stuart Greville Crabb & Ors v TUI Airways Ltd

Terms in an employment handbook may be incorporated separately into an employment contract where the parties intended that result and the particular provision is apt to be contractual. A handbook may therefore supply the detailed terms of a contractual ill-health benefit, even if it also contains advisory or insurer-dependent material.

A provision protecting benefits already in payment prevents unilateral alteration by the employer, but does not prevent consensual variation through a collective agreement where the employment contract provides for incorporation of such agreements. Collective bargaining does not ordinarily involve the employer exercising a contractual discretion, so public-law rationality principles applicable to discretionary decisions do not govern the negotiated variation. The implied term of trust and confidence nevertheless applies, but at the higher Malik threshold.

The claim was brought by airline pilots employed by TUI Airways Limited. They alleged that the introduction of Pilots Income Protection (PIP), through a collective agreement negotiated with the British Airline Pilots Association, unlawfully varied their contractual permanent health insurance benefits.

The central issues were whether provisions in the PHI handbook and proportionate-benefit guide were incorporated into the pilots’ contracts; whether benefits continued until State Pension Age or age 65; whether benefits in payment were protected from collective variation; and whether the collective bargaining and information process breached the implied term of trust and confidence.

1. Incorporation. The PHI handbook and the guide to proportionate benefit were incorporated into the pilots’ contracts through the contractual reference to PHI in the 2018 Memorandum of Agreement. The relevant provisions were apt for incorporation, although the documents had to be considered on a divisible basis. Their importance to remuneration, historical use, certainty and practical necessity supported incorporation.
2. Scope of benefit. The incorporated provisions entitled pilots to PHI benefits until the employer’s justified retirement age of 65, not until a later State Pension Age. Payment beyond 65 would not be a salary-replacement benefit for a pilot who could not lawfully fly and would make no commercial sense.
3. Linked claims and protected benefits. The linked-claim provision was contractual, subject to the insurer’s assessment of the medical evidence. Paragraph 5.1 protected benefits already in payment, whether insurer-funded or employer-funded, from unilateral alteration. It did not, however, create a carve-out from consensual variation by collective bargaining.
4. Collective variation. The pilots’ contracts incorporated future collectively negotiated agreements. BALPA’s agreement to the revised Schedule B therefore varied inconsistent PHI terms and validly brought in-claim pilots within PIP on reaching 60. The employer had not exercised the unilateral discretion contemplated by paragraph 5.1.
5. Trust and confidence. The implied term applied to the collective bargaining process, but the applicable question was whether the employer acted without reasonable and proper cause in a manner calculated or likely to destroy or seriously damage trust and confidence. The stricter Braganza rationality test did not apply. The alleged failures concerning consultation, information, assurances, pensions, GIP-gap liabilities and linked claims did not establish breach.
6. Judgment was entered for the Defendant. The Claimants were not entitled to the declarations or damages sought. Consequential orders, including costs, were to be agreed or determined at a further hearing.