Heis v MF Global UK Services arose out of a dispute between two companies, both part of a group which went into administration. "Services" employed and paid staff and seconded most of them to the main operating company, "UK". There was no written contract between them but there was a Services Agreement between Services and the ultimate holding company of both UK and Services. This Agreement said that Services' payroll costs would be met by service recipients – UK in this case. Payroll costs were defined as "aggregate costs …… of all salary, bonus, contractual and discretionary cash and non-cash benefits including…pension contributions…."
This was reflected in practice – UK had paid Services the seconded employees' payroll costs and had made employer pension contributions direct to the Services pension scheme trustees.
Services and UK disagreed over how the £35m debt to the pension fund which crystallised on administration should be split between them.
The High Court held that there was an implied contract between the Services and UK on similar terms to the express contract between Services and the holding company.
Pensions naturally fell within the "aggregate costs" definition and it was also wide enough to include an indemnity for the pension debt.
The Court of Appeal agreed. It was clear from the documentation that UK would keep Services indemnified against all costs associated with the seconded employees. That applied to ongoing employment costs and the funding deficits of the pension scheme.
