Twelve Cupcakes pleads guilty to underpaying foreign employees, prosecution seeks S$127,000 fine

SINGAPORE: A representative for confectionery firm Twelve Cupcakes pleaded guilty on Thursday (Dec 10) to underpaying seven employees of about S$114,000 in total over two years.

For 15 charges under the Employment of Foreign Manpower Act, with another 14 similar charges taken into consideration, the prosecution is seeking a fine of S$127,000.

In mitigation, the defence said that the new owners, India-based Dhunseri Group, had repaid the foreign employees the full sum owed to them.

He alleged that the new owners had continued the practice that was installed by the previous management.

Twelve Cupcakes was founded in 2011 by former DJ Daniel Ong and his then-wife, actress Jaime Teo. Dhunseri Group acquired 16 outlets from the couple in December 2016 and grew the outlets to 35 in Singapore today.

The court heard that the Ministry of Manpower (MOM) had carried out investigations in December 2018 against the firm after receiving information on contravention of labour laws.

Investigations found that seven employees, ranging from sales executives, customer service executives and a pastry chef, had been issued S-Passes to work for the company.

Under the Employment of Foreign Manpower (Work Passes) Regulations 2012, employers must pay not less than the fixed monthly salary due to the foreign employee for the month, and payment must be made not later than seven days after the end of the salary period.

The investigation found multiple contraventions of the law - Twelve Cupcakes had underpaid the seven foreign employees over about two years between December 2016 and November 2018.

They were promised fixed salaries of between S$2,200 and S$2,600, but given between S$200 and S$1,200 less than that.

OFFENCES DIFFICULT TO DETECT: MOM PROSECUTOR

MOM prosecutor Maximilian Chew sought a fine of S$127,000, noting that the offences were difficult to detect and took place over a considerable period of nearly two years.

Moreover, the company took further steps to conceal the latter part of its offending by crediting the agreed salaries to the employees' accounts then asking them to return the difference in order to avoid a paper trail.

If MOM had not received the information, the company would have most likely continued the offences, said Mr Chew.

He added that the crimes were motivated by profits, pointing to cost savings of about S$114,000 from the underpayments the company made over the period.

The company "never intended" to make the agreed payments, and such a "flagrant breach of the law ought not to be condoned", with a deterrent message sent to like-minded employers, he said.

Mr Chew added that Singapore is heavily reliant on foreign employees in many sectors and there is "enormous public interest" in holding employers fully accountable for their welfare, which includes full and prompt payments of salaries.

PRACTICE INHERITED BUT NOT ACCEPTABLE: DEFENCE

Defence lawyer S Balamurugan from K&L Gates Straits Law said his client accepts that such actions are not acceptable.

While it was the practice under the previous management that foreign employees received less than their fixed salaries, his client "accepts" that the firm should have discontinued the practice immediately when it acquired the business, alleged the lawyer.

"In any event, he accepts his culpability," he added. 

He also stressed that full restitution was made, although this was after investigations began - as stated by the prosecution. 

The restitution was made before the firm was charged, which shows that the company "has not shied away from taking responsibility at an early stage", said the defence.

Since the incidents, there have been no salary issues for both local and foreign employees despite challenging times, he added.

The judge adjourned sentencing to January.

In response to queries by CNA, former owner Mr Ong said: "Hiring and contracts of foreign labour were handled by a third party external agent. We were only notified when the investigations started in 2019. My lawyers are currently handling the matter of this ongoing case.”

CNA has reached out to Ms Teo.