Twelve Cupcakes admits underpaying foreign staff by $114k for 2 years

Acquired by an Indian tea producer in 2016, home-grown confectionery chain Twelve Cupcakes grew from 16 outlets to 35 in Singapore today.

But, for about two years, between January 2017 and December 2018, it underpaid at least seven of its foreign employees by a total of $114,150, including a pastry chef, two sales executives and customer service executives.

One employee was underpaid by nearly half his wages at times.

Yesterday, a company representative pleaded guilty to 15 Employment of Foreign Manpower Act charges, with another 14 similar charges taken into consideration.

FINE

Seeking a fine of $127,000, Ministry of Manpower (MOM) prosecutor Maximilian Chew told District Judge Adam Nakhoda that there was an enormous public interest in holding errant employers accountable given the heavy reliance on foreign manpower in many sectors here.

But defence counsel S. Balamurugan said the fine sought was crushing and would likely affect business operations.

Founded in 2011 by former DJ Daniel Ong and his then wife, former model Jaime Teo, Twelve Cupcakes was sold to India-based Dhunseri Group for $2.5 million in December 2016, a few months after the couple got divorced.

The court heard that between January 2017 and December 2018, the company breached a law requiring them to pay no less than the fixed monthly salary due to the seven foreign employees within seven days after the end of the previous month.

The fixed monthly salaries of the seven workers ranged from $2,200 to $2,600, but from January 2017 to April 2018, the wages credited to their bank accounts were a few hundred dollars to more than $1,000 short.

Court documents did not state the nationalities of the employees, who were all on S Passes, or if they are still working at the company.

From May 2018, the company changed tactics and started to credit the full fixed monthly salaries but made the employees return the differences in cash.

This enabled it to avoid detection by not leaving a paper trail, the prosecution said.

In one case, sales executive Ding Yujie was paid only $1,400 for his December 2016 to January 2018 wages, instead of his fixed monthly salary of $2,600.

He was paid just $1,650 for the subsequent 10 months.

Twelve Cupcakes only stopped after an MOM investigator was tipped off and probed the company in December 2018.

It has since paid the sums owed to the workers.

Yesterday, MOM's Mr Chew said the offences were difficult to detect, motivated by profit and were "conscious, planned and deliberate acts".

"If not for the fact that MOM had uncovered the offences, the company would most likely have carried on with its criminal conduct," he added.

In mitigation, Mr Balamurugan emphasised that his client made full restitution before it was charged, indicating it did not shy away from taking responsibility at an early stage.

"My client accepts its culpability and will not give excuses to this court," said the lawyer.

But the prosecutor pointed out that the money was repaid only after the company was already under investigation.

The defence said that since the offences, Twelve Cupcakes has not had any salary disputes with its employees, even amid "cash flow concerns" and the impact of Covid-19.

Mr Balamurugan had also noted that the underpaid employees were not forced into accepting the lower pay.

But Judge Nakhoda rejected this. In cases involving foreign workers, the bargaining power is very much skewed in favour of the employer, he said.

The case has been adjourned until Jan 7 for sentencing.