POSH Act Compliance

What Is POSH Act Compliance?

POSH Act compliance is the set of obligations every Indian workplace owes women under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The central obligation is procedural: any employer whose workplace has ten or more workers must constitute an Internal Committee (also called the Internal Complaints Committee, or ICC) to receive and inquire into complaints of sexual harassment, under section 4 of the Act. Workplaces below that threshold are not exempt from the Act itself — their employees instead take complaints to a government-run Local Committee under section 6 — but every employer, regardless of size, still owes the Act's other duties, including a safe working environment.

For a foreign company registering an Indian subsidiary, branch office, or liaison office, POSH compliance becomes live the moment the first woman employee joins, and its absence surfaces in three places a foreign investor cares about: the statutory Board's report every company must file, employer due-diligence checklists, and criminal liability that attaches to the employer personally.

Legal Basis

The Act and the 2013 Rules

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (Act 14 of 2013) sets out the Internal Committee's constitution at section 4, employer duties at section 19, the Committee's annual report at section 21, the employer's own reporting duty at section 22, and the penalty for non-compliance at section 26. The Central Government's Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Rules, 2013 (G.S.R. 769(E), notified 9 December 2013) fix the procedural timelines — how many days a respondent gets to reply, what the annual report must contain, and what allowance the external Committee member is paid.

Companies Act Disclosure — the Board’s Report

Every company registered under the Companies Act, 2013 must also confirm its POSH compliance in its statutory Board's report. The Companies (Accounts) Amendment Rules, 2018, dated 31 July 2018, amended Rule 8 of the Companies (Accounts) Rules, 2014 to require the Board's report to state that the company has complied with the provisions relating to the constitution of an Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. India Code indexes that amendment under the POSH Act itself. This one line turns POSH compliance from an HR matter into a director-signed, ROC-filed representation, and a false or missing statement adds exposure under the Companies Act to the POSH Act's own penalty.

The Ten-Employee Threshold

Section 6(1) of the Act describes the dividing line: the Local Committee, constituted by the District Officer in every district, receives complaints “from establishments where the Internal Committee has not been constituted due to having less than ten workers or if the complaint is against the employer himself.” The Act has read “Internal Committee” and “Local Committee” since Act 23 of 2016 substituted those terms with effect from 6 May 2016; section 2(h) defines the Internal Committee as the Internal Complaints Committee constituted under section 4. An employer with ten or more workers is expected to run its own Internal Committee; one with fewer routes complaints to the district-level Local Committee instead. Either way, the Act still applies — there is no headcount below which sexual harassment protection simply does not exist.

The threshold is counted at the level of the “workplace,” defined broadly at section 2(o) to include any office, branch, or unit of a government body, company, or private venture, plus hospitals, sports venues, and “any place visited by the employee arising out of or during the course of employment,” including employer-provided transport. A foreign company's Indian branch or liaison office is squarely a “workplace” for this purpose, and each administrative unit of a multi-location employer must have its own Internal Committee under the proviso to section 4(1).

Constituting the Internal Committee

Section 4(2) fixes the Internal Committee's composition. The employer nominates, by a written order:

• A Presiding Officer — a woman employed at a senior level, drawn first from the same workplace, then from other offices of the same employer if none is available there;
• Not less than two members from among employees, preferably committed to the cause of women or with social-work or legal experience; and
• One external member from an NGO or association committed to the cause of women, or a person familiar with sexual harassment issues.

At least half the nominated members must be women. Terms run for a period the employer specifies, not exceeding three years, and a member can be removed under section 4(5) for misconduct, a pending disciplinary proceeding, or abuse of position. The external member is not a volunteer: Rule 3 of the 2013 Rules entitles them to an allowance of ₹200 per day for Committee proceedings plus travel reimbursement, payable by the employer. Leaving this seat vacant is one of the most common ways an otherwise-functioning Internal Committee fails the Act's composition test.

Duties of the Employer

Section 19 lists what every employer must do, independent of whether a complaint has ever been filed: provide a safe working environment; display, at a conspicuous place, both the penal consequences of sexual harassment and the order constituting the Internal Committee; organise workshops and awareness programmes at regular intervals; provide the Committee with facilities to conduct an inquiry; assist in securing attendance of the respondent and witnesses; make available information the Committee requires; assist the woman if she chooses to also file a police complaint; treat sexual harassment as misconduct under service rules; and monitor timely submission of the Committee's reports. These are standing obligations — the displayed notice and the workshops are what an inspecting officer or a due-diligence reviewer checks first, well before any complaint exists.

Handling a Complaint: The Timelines

The Act and Rules run on fixed clocks:

During the pendency of an inquiry, section 12 lets the Committee recommend interim relief — transferring the aggrieved woman or the respondent, or granting the aggrieved woman leave of up to three months, over and above her normal entitlement. A quorum of at least three members, including the Presiding Officer, must be present for any hearing under Rule 7(7).

The Annual Report

Section 21(1) requires the Internal Committee to prepare an annual report each calendar year and submit it to both the employer and the District Officer, who forwards a summary to the State Government under section 21(2). Rule 14 fixes what the report must contain: complaints received during the year, complaints disposed of, cases pending for more than ninety days, workshops or awareness programmes conducted, and the nature of action taken. Section 22 then closes the loop: the employer must include the number of cases filed and their disposal in its own organisational annual report, or, where none exists, intimate the figures directly to the District Officer.

Penalties for Non-Compliance

Section 26(1) makes an employer liable to a fine of up to ₹50,000 for failing to constitute an Internal Committee, failing to take action under sections 13, 14, and 22, or otherwise contravening the Act or its rules. A repeat conviction under section 26(2) attracts twice the punishment that could have been imposed the first time (capped at the maximum for that offence), and can additionally trigger cancellation, withdrawal, or non-renewal of any licence or registration the employer needs to carry on business. Separately, Rule 12 requires the employer to recover a sum of ₹5,000 as a penalty from any person who breaches the confidentiality obligation under section 16.

The SHe-Box Portal

The Ministry of Women and Child Development operates SHe-Box (Sexual Harassment electronic Box) at shebox.wcd.gov.in as a single-window complaint channel: any woman facing workplace sexual harassment, across organised, unorganised, public, and private sectors, can register a complaint through the portal, which routes it to the authority with jurisdiction and lets her track its progress. SHe-Box does not replace an employer's Internal Committee; it is an additional, government-run channel that exists alongside it.

Why It Matters for Foreign Companies and Investors

The Act attaches to the Indian “workplace,” not to the nationality of the parent company. A foreign group that incorporates an Indian subsidiary or opens a branch office owes exactly the same POSH obligations as a domestic company from the day its first employee joins in India. Using an Employer of Record to hire in India does not outsource this duty away — the EOR, as the formal employer, must run its own Internal Committee, and the foreign company should confirm this is actually in place rather than assuming it. For an investor conducting due diligence on an Indian target, a missing Internal Committee, a generic Board’s-report statement, or annual reports that were never filed are fast, verifiable red flags that predict wider gaps in labour-law compliance, alongside issues like labour code registrations or Shops & Establishment Act licensing.

Common Mistakes

• Assuming a small liaison or branch office is exempt. Falling under ten workers removes the duty to run an Internal Committee, not the duty to provide a safe workplace or route complaints to the Local Committee.
• A generic Board's-report statement. The rule requires an affirmative confirmation, checked each year against whether the Committee is still validly constituted, not boilerplate carried forward.
• Letting the external member's seat lapse. A Committee missing its external member, or that never paid the prescribed allowance, can have its composition — and its findings — challenged.
• Treating the annual report as optional. Sections 21 and 22 are independent duties on the Committee and the employer respectively; neither discharges the other.
• No displayed notice. Section 19(b)'s requirement to display the penal consequences of harassment and the Committee's constituting order is trivial to fix but commonly overlooked.

Practical Example

A foreign medical-devices company incorporates a 14-employee Indian subsidiary in Pune. Because the subsidiary has more than ten workers, it must constitute an Internal Committee under section 4: a senior woman employee as Presiding Officer, two more employee members, and one external NGO member, with at least half the Committee female and the external member paid ₹200 per day plus travel. The company displays the constituting order and the penal consequences of harassment, and its first Board's report carries the statement confirming the Committee exists. If a complaint is later filed, HR has 7 working days to forward it to the respondent, the respondent 10 working days to reply, and the Committee 90 days to complete its inquiry plus 10 more days to report findings — all tracked against the Committee's annual report due at year-end. Skipping the Committee altogether would expose the company to a fine of up to ₹50,000 under section 26, a defective Board's-report disclosure, and a live SHe-Box channel through which the same complaint could reach the government regardless.

Frequently Asked Questions

Does POSH compliance apply if my Indian entity has no women employees yet?

Yes. The Act's duties, including a safe working environment under section 19, attach to the employer, not to whether a woman is currently employed. Most companies constitute the Internal Committee at incorporation, before hiring, so it is ready the moment the first woman joins.

What happens if my workplace has fewer than ten workers?

You are not required to constitute your own Internal Committee under section 4, but the Act still applies: under section 6(1), complaints from such workplaces go to the district-level Local Complaints Committee instead, and the employer's other section 19 duties remain in force.

Is the external NGO member really mandatory, even for a small company?

Yes, wherever an Internal Committee is constituted. Section 4(2)(c) requires one member from an NGO or association committed to the cause of women, and Rule 3 sets that member's daily allowance at ₹200 plus travel, payable by the employer.

What exactly must the Board's report say about POSH compliance?

Under Rule 8 of the Companies (Accounts) Rules, 2014, the Board's report must state that the company has complied with the provisions relating to constituting the Internal Complaints Committee. It is a compliance confirmation, not complaint numbers — those flow into the Committee's own annual report under section 21 and the employer's duty under section 22.

What is SHe-Box, and does my company need to register for it?

SHe-Box is a Ministry of Women and Child Development portal at shebox.wcd.gov.in letting any woman file a workplace sexual harassment complaint directly with the government. Employers do not register on it; it is an independent channel alongside, not instead of, the employer's own Internal Committee.

See also: India's Four Labour Codes, Shops & Establishment Act, and Employer of Record (EOR).

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