By now, you would likely have heard about the criminal case involving Twelve Cupcakes underpaying their foreign employees for several years since 2013.
Summary Of What Happened In The Twelve Cupcakes Case
Twelve Cupcakes was founded by former radio DJ Daniel Ong and former model Jamie Teo in 2011. After growing the bakery chain to 16 stores, it was then sold in 2017 to the Dhunseri Group for $2.5 million. Dhunseri Group has since grown the chain to 35 stores islandwide.
Co-founders Daniel Ong and Jamie Teo were married when they founded the bakery business together. After deciding to hire foreign workers in their expansion plan, the pair began underpaying their foreign employees. This was done by paying them the minimum required salary and then requiring the employees to hand over an amount to them in cash.
The foreign employees were hired under S Passes, which require a minimum qualifying salary. Today, the minimum qualifying salary requirement for S Pass holders is $2,500. This is slightly higher than what the minimum qualifying salaries would have been when the offences were made. For instance, the minimum qualifying salary for S Pass holders was $2,200 before 1 January 2019, when it was increased to $2,300.
Read Also: 4 Types Of Companies Most Affected By The Latest Changes To Employment Pass & S Pass Rules
When Dhunseri Group bought over the brand, they persisted with similar underpayment practices.
Twelve Cupcakes has been fined $119,500 for underpaying their foreign employees. They have since made full restitution to the affected foreign employees.
Jamie Teo has also been fined $65,000 for her role in underpaying the employees when she was a director in the firm. Her co-founder and ex-husband Daniel Ong’s case is still pending. According to news reports, the pair has not made restitution to the affected employees.
Minimum Qualifying Salaries When Hiring Foreign Employees Under S Pass And Employment Pass (EP) In Singapore
Due to Singapore’s relatively small citizen population, many employers here rely on foreign employees to run and grow their business.
When businesses hire foreign employees under an S Pass and Employment Pass, there is a minimum qualifying salary that they have to pay the foreign employees.
S Pass holders: Businesses have to pay a minimum qualifying salary of $2,500 for the foreign employees under S Passes. Older and more experienced applicants will require a higher minimum salary to qualify. Employers also have to pay a levy of between $330 to $650 depending on the percentage of their employees who comprise S Pass holders.
Employment Pass (EP) holders: Business have to pay a minimum qualifying salary of $4,500 for foreign employees under Employment Passes (EP). For EPs in the financial services sector, the minimum qualifying salary is $5,000. Older and more experienced applicants will also require a higher minimum salary to qualify. There is no foreign worker levy or quota.
There may be other requirements in addition to the minimum qualifying salaries and levy that has to be paid. You can refer to the MOM website for the eligibility requirements on S Pass holders and Employment Pass (EP) holders.
Read Also: Foreign Worker Quota In Singapore: What Is It And How To Calculate It For Your Business
Underpaying Or Over-Declaring Salaries Not Allowed
There are strict minimum qualifying salary requirements for Singapore businesses to hire foreign employees here. This is to ensure that the quality of foreign employees in Singapore are of a high calibre – since local employees may also be competing for such jobs.
The clear minimum salary requirements for foreign employees makes it difficult for employers to underpay their employees for an extended period of time. Foreign employees, even if they do not know the Singapore labour laws, can simply refer to the MOM website or chat with other foreign employees in Singapore to understand this.
What is harder to verify is the method Twelve Cupcakes was using, where it paid the minimum qualifying salary and then requiring them refund a portion of it. This was how it was able to go on at the firm since 2013.
Of course, this goes against what is acceptable under the Employment of Foreign Manpower Act. Employers should also note that, according to the MOM website, salary should not include:
- Value of accommodation, utilities or other amenities
- Pension or provident fund contribution by employers
- Travelling allowance
- Payments for expenses incurred during work
- Gratuity payable on discharge or retirement
- Retrenchment benefits
Paying A “Fair Salary” Is Not Relevant To The Discussion
When hiring foreign employees from Singapore’s neighbouring countries, there is a good chance that employers can find willing employees at lower salaries.
However, even if a foreign employee accepts a lower salary after fair negotiations of wages, this is irrelevant as Singapore has strict minimum salary requirements.
Another way to look at it is that employers will typically have the upper-hand in negotiations with foreign employees, especially if they are from poorer backgrounds. By negotiating a “fair” salary with them, they may not fully understand the cost of living and working in Singapore. Even when they do understand, reporting the employer will also mean that they will very likely lose their jobs rather than get paid the salary they should be getting.
The minimum salary requirements are to ensure that Singapore does not get flooded with cheap foreign labour and safeguard local employees. It also exists to protect the foreign employee coming into Singapore for work.
In a way, this is a minimum wage for foreigners working in Singapore.
Read Also: Guide To Work Passes In Singapore: Work Permits, S Pass And Employment Pass (EP)
(Top image: Raymond Quek)
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