SINGAPORE — Local cupcake chain Twelve Cupcakes was fined $119,500 on Thursday (12 January) for underpaying seven of its foreign workers for almost two years.
The company earlier pleaded guilty to 15 charges under the Employment of Foreign Manpower Act, with 14 similar charges taken into consideration for sentencing.
Between January 2017 and April 2018, the company credited lower wages into the staff’s bank accounts, said Ministry of Manpower (MOM) prosecutor Maximilian Chew.
From May 2018, the company began crediting the staff members their rightful salaries but then asked for them to return the difference between the sum given and their previously lower wage amount, he added.
All the affected employees were S-Pass holders who were supposed to earn monthly salaries of between $2,200 and $2,600. Instead, they received between $1,400 and $2,050. These staff members included a pastry chef, two sales executives and four customer service executives.
MOM began investigations into the company in December 2018 after receiving a tip-off. The seven staff members have since received restitution for their lost income.
In sentencing the firm, District Judge Adam Nakhoda noted that there were aggravating factors, including the offences being difficult to detect. He said this was shown by how Twelve Cupcakes committed the offences over a considerable period of time.
The company had also made an effort to hide its wrongdoing.
However, the judge also noted that the company had made full restitution to the affected staff and had pleaded guilty early on in the case.
MOM sought a fine of $127,000, while the firm’s lawyer S Balamurugan asked for a fine of $100,000.
The lawyer said that upon being notified by MOM in December 2018 that the practice was wrong, the firm settled the arrears in the salaries of the affected employees and no further complaint was received.
Balamurugan also pointed out that the firm was unlikely to reoffend.
“To-date, our client continues to pay its workers’ their full salaries promptly despite cashflow concerns and the effect the pandemic has on its business,” he said.
“Our client pleads that a fine of $127,000 as sought by the prosecution is crushing and would likely affect its business operations adversely during these extraordinary times.”
Founders facing charges
Twelve Cupcakes was founded in 2011 by radio DJ Daniel Ong and former actress Jaime Teo. After their divorce, the company was sold to India-based Dhunseri Group on 15 December 2016 for $2.5 million.
Ong and Teo were charged in court on 29 December last year with failing to pay or underpaying employees' salaries. Their case is still pending before the courts.
The CEO and director of Twelve Cupcakes is Mrigank Dhanuka, who holds an employment pass here. Since acquiring the confectionary chain, Dhanuka and his family relocated to Singapore to head its operations.
The group later expanded the chain, more than doubling the number of Twelve Cupcakes outlets from 16 at the time it was acquired to 35 today.
Balamurugan previously told the court that it was the practice under the business’ previous owners that the salary payments for some foreign employees’ would be less than the fixed monthly salaries, and that the affected employees had accepted the arrangement.
“Our client admits, on reflection, that it should have discontinued the practice immediately. In this regard, our client is fully cognisant of its ultimate responsibility to ensure that all employees are paid their fixed salaries,” he added.
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