"We're too small for POSH": what the Act actually requires from 10 employees onward

The most common thing we hear from founders with a 12-person team is some version of: "POSH applies to big companies — we'll set it up when we cross 50." The second most common is from a 200-person company that did constitute an Internal Committee four years ago, has never held a meeting, and has never filed the annual report. Both are non-compliant, and the second one is in worse shape than the first, because it has a paper committee that will not survive scrutiny.

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 — universally called the POSH Act — has a headcount trigger of 10, not 50 or 100. And the obligation is not a one-time registration. It is a standing structure plus an annual filing, with a specific penalty attached and a second-strike consequence that can reach your business licence.

What the law actually says

Section 4 — the Internal Committee is mandatory at 10 employees. Every employer of a workplace employing ten or more employees must constitute an Internal Committee (IC) by written order. The Act as originally passed called it the "Internal Complaints Committee" (ICC); the 2016 amendment renamed it simply "Internal Committee," and both terms are still used interchangeably in circulars and HR policies. It is the same body.

The composition is prescribed, not discretionary:

• A Presiding Officer who must be a woman employed at a senior level at that workplace. If no senior-level woman is available at that workplace, she must be nominated from another office or administrative unit of the same employer, or from another workplace of the same organisation.
• Not less than two members from among employees, preferably committed to the cause of women, or who have had experience in social work or legal knowledge.
• One external member from a non-governmental organisation or association committed to the cause of women, or a person familiar with issues relating to sexual harassment.
• At least one-half of the total members must be women.

The term of office is a maximum of three years from the date of nomination. This is the requirement most companies quietly breach — a committee constituted in 2021 and never reconstituted is not a validly constituted IC in 2026.

Section 6 — Local Committee. Where an establishment has fewer than ten employees, or where the complaint is against the employer himself, jurisdiction moves to the Local Committee constituted by the District Officer for that district. So "under ten" does not mean "no forum" — it means the employee goes to the district-level body instead of an internal one.

Section 19 — employer duties beyond the committee. The employer must provide a safe working environment, display the penal consequences of sexual harassment and the composition of the IC conspicuously at the workplace, organise workshops and awareness programmes at regular intervals, conduct capacity-building and skill-building programmes for IC members, provide facilities to the IC for dealing with the complaint and conducting inquiry, assist the woman if she chooses to file a criminal complaint, and treat sexual harassment as misconduct under the applicable service rules and initiate action accordingly.

That last one is a drafting obligation, not an attitude. If your employment agreements and HR handbook do not define sexual harassment as misconduct, you have not complied with Section 19 even if your IC is perfectly constituted.

Section 21 — the annual report. The IC must, in each calendar year, prepare an annual report and submit it to the employer and to the District Officer. The report is not free-form. Rule 14 of the POSH Rules, 2013 prescribes exactly what it contains:

• Number of complaints of sexual harassment received in the year
• Number of complaints disposed of during the year
• Number of cases pending for more than ninety days
• Number of workshops or awareness programmes carried out
• Nature of action taken by the employer

Note point 4. A nil-complaint year is not a nil report. If you received zero complaints, you still file — reporting zero complaints and however many awareness programmes you actually conducted. A report showing zero complaints and zero workshops is itself an admission of a Section 19 breach.

Section 22 — disclosure in the Board's Report. The employer must include in its annual report the number of cases filed, if any, and their disposal. For companies, this connects to Rule 8(5)(x) of the Companies (Accounts) Rules, 2014, which requires the Board's Report to state that the company has complied with the provisions relating to constitution of an Internal Complaints Committee under the POSH Act. Auditors check this. It appears in the Board's Report you file with AOC-4.

Section 26 — the penalty. Failure to constitute an IC, failure to take action under Sections 13, 14 and 22, or contravention of any provision of the Act or rules, attracts a fine of up to ₹50,000. And the second limb is the one that matters more: if the employer is convicted of the same offence subsequently, the punishment is twice the earlier punishment, and can extend to cancellation of the licence or withdrawal or non-renewal of the registration required for carrying on the business.

For a regulated business — an NBFC, a hospital, an educational institution, a factory operating under a state licence — that second-strike provision is a far larger exposure than the ₹50,000.

Practical implications

The 10-employee count is not "10 women." The trigger is ten or more employees, of any gender. A firm with nine men and one woman crosses the threshold. The count also includes employees "employed on a regular, temporary, ad hoc or daily wage basis, either directly or through an agent, including a contractor" — so your contract staff and outsourced housekeeping count toward the ten.

"Workplace" is broader than your office. The definition in Section 2(o) covers any place visited by the employee arising out of or during the course of employment, including transportation provided by the employer for undertaking the journey. A client site, an offsite, a work trip, and the company cab all sit inside the definition. Since remote and hybrid work became standard, the sensible reading — and the one HR policies should adopt — is that virtual meetings and official communication channels connected to employment fall within it too.

The external member is not optional and is not free. A great many small companies constitute an IC of three internal employees and stop there. That committee is defective. The external member must come from an NGO or association committed to the cause of women, or be a person familiar with issues relating to sexual harassment. Rule 4 permits payment of fees or allowances — commonly ₹200 per day of proceedings plus travel, though many organisations pay a professional retainer well above this. Budget for it.

Timelines are short and they run against you. A complaint must ordinarily be made within three months of the incident (extendable by a further three months for recorded reasons). The inquiry must be completed within ninety days. The IC's report goes to the employer within ten days of completion, and the employer must act on the recommendations within sixty days. An appeal under Section 18 lies within ninety days. Miss the ninety-day inquiry window and it becomes a line item in your own Section 21 report — "cases pending for more than ninety days."

Confidentiality is enforced with its own penalty. Section 16 prohibits publication or disclosure of the contents of the complaint, the identity of the parties or witnesses, and the inquiry proceedings. Section 17 attaches a penalty for breach, recoverable from the person concerned. Circulating the complaint on an internal email thread is itself an offence.

Step-by-step: what to do

• Count your headcount correctly. Include full-time, part-time, temporary, ad hoc, daily wage, probationers, interns and contract workers engaged through an agency. If the total is ten or more on any day, you are in scope.
• Issue a written constitution order. A board resolution or a signed order from the employer naming the Presiding Officer, the two internal members, and the external member — with designations and the date of nomination. Diarise the three-year expiry the day you sign it.
• Identify and engage the external member. Approach a recognised NGO working on women's rights, or a lawyer or professional with demonstrable experience in sexual harassment matters. Execute a short engagement letter setting out the fee per proceeding and confidentiality obligations.
• Adopt a written POSH policy and amend your service rules. The policy should define sexual harassment in the terms of Section 2(n) and Section 3, set out the complaint mechanism, name the IC members with contact details, and — critically — the employment agreement or standing orders must classify sexual harassment as misconduct so that disciplinary action under Section 19 is enforceable.
• Display the required notice. Composition of the IC and the penal consequences of sexual harassment, displayed conspicuously at the workplace. For distributed teams, also on the intranet and in the onboarding pack.
• Run the awareness programme and the IC capacity-building session — and document both. Attendance sheets, dated agenda, photographs or recording links. Without evidence, point 4 of the annual report is unsupported.
• Maintain a complaint register. Even if it stays empty. It is the source document for the annual report.
• File the Section 21 annual report with the District Officer by the end of the calendar year. Not the financial year — the Act says "in each calendar year." Retain the acknowledgment.
• Insert the Section 22 disclosure in the Board's Report and confirm the Rule 8(5)(x) statement is present before AOC-4 is filed.
• Reconstitute the IC before the three-year term expires, and reissue the order whenever the Presiding Officer or a member resigns or leaves the organisation.

FAQ

We have twelve employees and eleven of them are men. Do we still need an IC?
Yes. The trigger in Section 4 is ten or more employees, not ten or more women. The Presiding Officer must be a woman employed at a senior level; if there is no senior-level woman at that workplace, nominate one from another office or unit of the same organisation. If your organisation has no woman employee at all, the practical route is to nominate an external woman member of sufficient standing and, where the structure genuinely cannot support a valid IC, route complaints to the Local Committee under Section 6 — while recording in writing why an IC could not be constituted.

We had zero complaints this year. Do we still file the annual report?
Yes. Section 21 requires an annual report in each calendar year regardless of complaint volume. Rule 14 asks for the number of workshops and awareness programmes as well, so a nil-complaint report still carries substantive content. Filing nothing is the breach; filing zero complaints is compliance.

What is the actual exposure if we simply never constitute an IC?
A fine of up to ₹50,000 under Section 26 for the first offence. On a subsequent conviction for the same offence, twice that punishment plus possible cancellation of the licence, or withdrawal or non-renewal of the registration required to carry on your business. Separately, the missing Rule 8(5)(x) statement in the Board's Report is a Companies Act deficiency your auditor is obliged to note, and any employee litigation will open with the absence of a forum.

Do our fully remote employees in another state fall within the IC's jurisdiction?
Yes, where they are employees of the same employer. "Workplace" under Section 2(o) is defined by the employment relationship and the course of employment, not by a physical address. Where you have a separate office or administrative unit in another location with its own ten-plus headcount, constitute an IC for that unit as well — the Act contemplates committees at each administrative unit or office.

For your specific situation, book a consultation at harunraaj.com

---

See Also

• "Leave encashment is fully tax-free": What ITA 2025 actually says
• "Professional tax is a central tax on professionals": What the law actually says
• "ESIC only applies if you have 20 employees": what the law actually says in 2026

Need help with this?

Our team handles the paperwork. You focus on your business.