CPF to take action against honestbee for unpaid July contributions

Singapore

THE Central Provident Fund (CPF) Board is taking enforcement action against honestbee for failing to pay contributions for its employees in July, a spokesman for the board said in response to queries from The Business Times.

The spokesman was unable to elaborate by press time on the number of honestbee employees affected and the specific steps the board will take against the startup. honestbee did not respond by press time to queries on the matter.

Meanwhile, 38 former employees of honestbee have filed claims with the Tripartite Alliance for Dispute Management (TADM) over unpaid salaries for July and August, according to the Ministry of Manpower (MOM).

Most of these employees are owed between one and two months' salary, an MOM spokesman told BT. Out of the 38, five are former employees of habitat, honestbee's supermarket.

Earlier in August, honestbee had laid off 38 staff, although it is not clear if it is the exact same group that has filed the TADM claims.

It is also not known how much honestbee owes its former staff in total, but six ex-employees who spoke to BT said that they are owed over S$15,000 collectively, excluding CPF contributions.

In response to queries from BT on the TADM claims, an honestbee spokesman confirmed that there is a "salary delay for honestbee's ex-employees and employees currently serving notice" due to insufficient working capital.

TADM has conducted mediation sessions for earlier batches of the ex-employees, coming up with agreed payment schedules. Mediation sessions have also been scheduled for the remaining employees.

"TADM is monitoring the payment schedule closely. If there is a default in the scheduled payment, TADM will advise and assist employees in enforcing their settlement agreements. Where applicable, TADM will also extend financial assistance to the employees," the MOM spokesman said.

Former employees of honestbee who are still owed salaries should file their claims with TADM soon as possible, the MOM spokesman added.

One former employee in his late 60s told BT that he is owed over S$4,000, after CPF contributions.

"It feels very unfair that they can do this to us; at my age, it is so hard to find another job... what if the company shuts down and we don't get paid?" he questioned.

For companies that go into liquidation, up to five months' worth of employees' salaries or S$13,000, whichever is lower, will be paid in priority to all other unsecured debts, after the cost of liquidation, noted senior counsel Thio Shen Yi, who heads TSMP's restructuring practice.

Secured creditors are generally allowed to enforce their charges, but "one exception is that where the assets of the company are insufficient to meet certain preferential debts, including those owed to employees, these debts... have priority over the claims of the holders of debentures under any charge which was created as a floating charge", explained Justin Yip, partner at Withers KhattarWong.

This may apply in honestbee's case. The startup's only secured lenders are two funds of Formation Group, which extended US$4 million in loans secured by debentures that carry floating charges over all of the startup's assets.

When asked how MOM would assist former employees should honestbee be liquidated, the spokesman replied: "Affected employees will have to file their proof of debt with the appointed liquidator who will manage the payment of the debts to the employees. Employees who need further advice and assistance with the process can approach TADM."

honestbee "has the full intention in meeting its obligations to staff", the startup's spokesman added.