Former Twelve Cupcakes workers to get part of unpaid salaries after months of talks: Union

Former employees of the once-popular Twelve Cupcakes bakery in Singapore are poised to receive portions of their unpaid salaries following protracted negotiations facilitated by the Food, Drinks and Allied Workers Union (FDAWU). The resolution, stemming from the company’s liquidation, highlights ongoing challenges in protecting worker rights amidst corporate restructuring and the complexities of cross-border ownership. This case underscores the need for robust corporate legal counsel specializing in insolvency and employment law.

The Lingering Aftermath of a Sweet Deal Gone Sour

The saga of Twelve Cupcakes, founded in 2011 by Daniel Ong and Jaime Teo, serves as a cautionary tale for the region’s burgeoning food and beverage sector. While initially a darling of Singapore’s cafe culture, the brand’s trajectory took a downturn after its 2016 sale to India-based Dhunseri Group. The subsequent revelation of underpaid employees, culminating in a S$119,500 fine in January 2021 – a figure equivalent to approximately US$91,800 at the time – exposed systemic issues within the company’s payroll practices. The initial fines levied against the company, as reported by Channel NewsAsia, were a clear signal of regulatory scrutiny.

The current payout to affected workers, while a positive step, is a delayed remedy. The FDAWU’s involvement has been crucial, providing not only legal guidance but also practical support, including financial assistance – over S$9,000 in grocery vouchers disbursed since November 2025 – and job placement services. More than 400 job vacancies were shared among the 70 affected workers, demonstrating a proactive approach to mitigating the impact of job losses. This situation highlights the critical role of unions in navigating the often-opaque process of liquidation and ensuring workers receive their due compensation.

The Financial Implications of Corporate Liquidation

Corporate liquidation, while sometimes necessary, invariably creates a ripple effect of financial instability. Unpaid salaries represent a significant liability, often falling low on the priority list during asset distribution. This creates a substantial risk for employees, particularly those in lower-wage positions. The delay in resolving these claims can lead to personal financial hardship and erode trust in the employer-employee relationship. The reputational damage to the company – and potentially its parent organization – can have long-term consequences.

The Dhunseri Group’s acquisition of Twelve Cupcakes, while initially intended to fuel expansion, ultimately failed to deliver sustainable growth. The group’s broader financial performance is currently under observation. According to data from Bloomberg, Dhunseri Group’s consolidated revenue for fiscal year 2025 was reported at INR 12.5 billion, with an EBITDA margin of 8.2%. But, the Twelve Cupcakes subsidiary consistently underperformed, contributing to overall margin pressure.

“We’re seeing a pattern of private equity-backed acquisitions in the F&B sector where operational integration and cultural alignment are overlooked. This often leads to cost-cutting measures that disproportionately impact employees and brand equity.”

— Anya Sharma, Partner, Crestview Capital

Navigating the Complexities of Cross-Border Employment

The Twelve Cupcakes case also underscores the challenges inherent in cross-border employment. The initial underpayment of foreign employees, and the subsequent fines levied under the Employment of Foreign Manpower Act, highlight the need for meticulous compliance with local labor laws. Companies operating internationally must invest in robust HR infrastructure and legal expertise to ensure they are meeting their obligations to all employees, regardless of nationality.

The practice of stating a higher salary on paper than what was actually received, as admitted by Twelve Cupcakes, is a particularly egregious violation of labor standards. This deceptive practice not only defrauds employees but also creates significant legal and financial risks for the company.

The Role of Due Diligence and Risk Mitigation

Before any acquisition, thorough due diligence is paramount. This includes a comprehensive review of the target company’s financial records, employment practices, and legal compliance history. Identifying potential liabilities, such as unpaid wages or pending litigation, is crucial for accurately assessing the risks and negotiating a fair purchase price.

Companies should also consider implementing robust risk mitigation strategies, such as employment practices liability insurance (EPLI), to protect themselves against potential claims. Investing in employee training and compliance programs can aid prevent future violations of labor laws.

The increasing complexity of global supply chains and labor regulations necessitates the engagement of specialized HR consulting firms. These firms can provide expert guidance on compliance, risk management, and best practices for managing a diverse workforce.

Looking Ahead: The Future of F&B Acquisitions

The Twelve Cupcakes case serves as a stark reminder that financial success cannot come at the expense of worker rights. As the F&B sector continues to evolve, with increasing consolidation and private equity involvement, it is imperative that companies prioritize ethical and sustainable business practices.

The upcoming fiscal quarters will likely see increased scrutiny of labor practices in the F&B industry, particularly in regions with a high proportion of migrant workers. Investors will be paying close attention to companies’ commitment to fair wages, safe working conditions, and compliance with local labor laws.

The current macroeconomic environment, characterized by rising interest rates and inflationary pressures, is further exacerbating the challenges faced by F&B companies. Maintaining profitability while ensuring fair treatment of employees requires careful financial planning and strategic decision-making.

“The days of prioritizing short-term profits over long-term sustainability are over. Investors are increasingly demanding that companies demonstrate a commitment to ESG principles, including fair labor practices.”

— Marcus Chen, Managing Director, BlackRock Asia

For businesses navigating these turbulent waters, partnering with experienced financial advisory services is no longer a luxury, but a necessity. The World Today News Directory provides access to a vetted network of B2B providers, including legal counsel, HR consultants, and financial advisors, who can help you navigate the complexities of the modern business landscape and build a sustainable, ethical, and profitable enterprise.