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Twelve Cupcakes admits to underpaying foreign employees over 2 years; lawyer says founders started the practice

SINGAPORE — Homegrown bakery chain Twelve Cupcakes pleaded guilty on Thursday (Dec 10) to underpaying eight of its foreign employees from 2017 to 2019.

Twelve Cupcakes pleaded guilty to underpaying eight of its foreign employees from 2017 to 2019.

Twelve Cupcakes pleaded guilty to underpaying eight of its foreign employees from 2017 to 2019.

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  • Homegrown bakery chain Twelve Cupcakes pleaded guilty to underpaying eight foreign employees  
  • After some time, the company credited the correct sums into employees’ bank accounts but they were then told to return some of the money 
  • Dhunseri Group, which bought the business in 2017, said the practice began when it was managed by its founders, ex-radio DJ Daniel Ong and actress Jaime Teo


SINGAPORE — Homegrown bakery chain Twelve Cupcakes pleaded guilty on Thursday (Dec 10) to underpaying eight of its foreign employees from 2017 to 2019. 

The firm admitted to 15 counts of contravening rules under the Employment of Foreign Manpower Act pertaining to employers of S Pass holders. The S Pass is given by the Ministry of Manpower (MOM) to mid-level, skilled foreign workers and they need to earn at least S$2,500 a month.

District Judge Adam Nakhoda will consider another 14 charges during sentencing on Jan 7. The company could be fined up to S$10,000 or S$20,000 for each charge.

MOM's prosecutor Maximilian Chew is seeking a total fine of S$127,000. 

The firm has fully paid salary arrears of S$114,150 to the affected employees after investigations began.

Lawyer S Balamurugan, who represents Twelve Cupcakes, told the court that his client, Indian tea company Dhunseri Group, continued to underpay foreign employees because this was a practice put in place by the company’s founders.

Dhunseri bought the confectionery business for S$2.5 million in January 2017 from former radio deejay Daniel Ong and his ex-wife and actress Jaime Teo.

The chain has 43 stores across Indonesia, Hong Kong, Singapore and Taiwan.

ONE EMPLOYEE PAID ABOUT S$11,000 LESS

The court heard that among their offences, Twelve Cupcakes underpaid four customer service executives and two sales executives for the months of December 2016 to January 2019.

For example, a customer service executive received between S$1,550 and S$2,050 monthly over the 26-month period. 

She was supposed to be paid S$2,300 before her salary was raised to S$2,600 in November 2017.

Her salary shortfall came up to at least S$11,000.

Four other employees received less than their monthly wages of between S$2,200 and S$2,600 for 24 months.

A pastry chef received S$900 less than what he was supposed to every month.

Between January 2017 and April 2018, the firm underpaid employees. From May 2018 onwards, the employees received the correct quantums in their bank accounts but were told to return some of their pay to Twelve Cupcakes.

MOM began investigating the company in December 2018 after receiving information about the offences.

TOOK ‘ACTIVE STEPS’ TO CONCEAL OFFENCES

In seeking the S$127,000 fine, the MOM prosecutor leaned on three aggravating factors.

This included the difficulty in detecting the crimes and Twelve Cupcakes “taking active steps” to conceal the offences by asking the employees to return the differences in salaries.

If the ministry had not received the information it did, Twelve Cupcakes would "most likely have continued with (its) offending conduct”, Mr Chew said.

The firm was also “clearly motivated by profits” and made restitution only after investigations began, which suggested that it would have continued breaking the law if it were not caught, the prosecutor added.

“This flagrant breach of the law should not be condoned. A message should be sent to like-minded employers,” he said.

Mr Chew also referred to Mr Balamurugan’s mitigation plea where he had highlighted the embarrassment his client would suffer. 

“Adverse media publicity is not a mitigating factor,” the prosecutor said.

In mitigation, Mr Balamurugan told the court that the fine was “crushing” and would adversely affect the firm’s operations during the ongoing Covid-19 pandemic.

He added that his client understood that his actions were not acceptable.

The chief executive officer of Dhunseri Group, which is based in Kolkata in India, and his family had relocated to Singapore to head Twelve Cupcakes’ operations.

Mr Balamurugan added: “While it was the practice under the previous owners’ management that the salary payments were less than the fixed salaries, the foreign employees agreed and accepted their actual salaries.

“(My client) accepts that he should have discontinued the practice when they acquired the business.”

Neither Mr Ong nor Ms Teo face any charges for now.

In response to TODAY’s queries, Mr Ong said in an email: “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.”

Twelve Cupcakes was previously in the spotlight in 2013 for similar employee and salary matters. 

Back then, Mr Ong rejected allegations published on now-defunct socio-political website The Real Singapore that the firm exploited foreign workers by making them work longer hours than resident employees, for low pay and with no overtime pay.

On Thursday, Mr Balamurugan also argued that the employees in the latest case could have chosen not to accept the lower salaries or report the matter to the authorities.

District Judge Nakhoda disagreed, pointing out that companies hold a higher bargaining power. 

“Maybe (the employees) can’t find another job,” the judge added.

Related topics

Twelve Cupcakes salary court crime MOM

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