Sexual Harassment in Startups and SMEs

A year back one of my clients called me early in the morning and with a tensed voice said, “I might be screwed big time!” I pacified him and asked him about the issue, and after giving a patient hearing understood that it was indeed a matter of concern. It so happened that couple of days before, a male joinee in the blue-collar department of the company had an argument with one of his seniors when the woman asked him about his work. He went on to abuse the woman publicly and even said “Aap ek aurat ho, or aap hote kaun ho ek mard ka uska jimmedari ke bare mein puchne ke liye.” The next day woman complained to my client who was the CEO of the start-up.  Now the problem was, this being a sexual offence should have been taken to the Internal committee for Sexual Harassment of the company, but the start-up didn’t have one! Nor it had a Sexual Harassment Policy. The promoters did not have any idea that like PF, ESI, GST- Compliance under “Prevention of Harassment under Sexual Offences” is also mandatory for entities with more than ten employees. If non-compliant then the government has the power to cancel its license and impose penalty on the company and the key-decision makers of the organization.

Sexual Harassment in Startups and SMEs

This is not a unique problem. In India, where compliance is often neglected and thought to be unimportant, SMEs and Startups do not take Sexual Harassment Act seriously and often such harassment is taken for granted or brushed under the carpet. SMEs and Startups which are perhaps the backbone of the country, employing millions each year either avoid this implementation or in case they implement it is only to tick the compliance check list and not on the spirit of the regulation. From Uber to ScoopWhoop, from The Viral Fever to the very recent AIB Episode, time and again it showed how big the problem is in the industry. Couple of years back, a survey in this regard was conducted by the Institute Company Secretary and it showed how dismal the condition is. Only 1.62% of the respondent have implemented the law in totality!


Now let us understand some of the very important points of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (“POSH Act”)- 


1.This Act is framed based on the Vishaka Guidelines and subsequent judgement by the Courts

2. Complainant to file complain within 3 months from the date of incident

3. Any Entity with more than ten employees should have implement the Act.

4. The POSH Act applies to both the organized and unorganized sectors in India. It inter alia, applies to government bodies, private and public sector organizations including NGOs, hospitals, educational institutes and sports institutions.

5. A four-member internal complaints committee presided by a woman officer is required to be set at all offices of the company where there are more than ten employees

6. ICC must complete inquiry within 90 days from receipt of written complaint

7. The company should from time to time sensitize all employees to the provision of Sexual Harassment Act and hold skill building exercise for the members of ICC

8. The definition of an ‘employee’ under the POSH Act is fairly wide to cover regular, temporary, ad hoc employees, individuals engaged on a daily wage basis, either directly or through an agent, contract labourers, co-workers, probationers, trainees, and apprentices, with or without the knowledge of the principal employer, whether for remuneration or not, working on a voluntary basis or otherwise, whether the terms of employment are express or implied.

9.The Complainant is liable to get compensation due to the harassment which can be deducted from the salary of the guilty. Also, disciplinary action can be taken against the party.

10. Non-Compliance under this Act in this regard will result in imposition of penalty of Rs 50,000 on the company and any repetition of the same might result in the cancellation of Business License.


An overview of the Redressal Procedure

1.Complainant reports incident within 3 months (or 6 months in case of valid reason) of Sexual Harassment

2.ICC reviews whether complain is prima-facie maintainable or not

3.If not, then dismissed, otherwise it is taken into consideration

4.There are two ways of resolution- Conciliation and Formal Inquiry

5.In case of conciliation (which is done at the request of the Aggrieved woman) ICC discusses with both the parties and recommends terms of settlement agreement

6.In case of Formal Inquiry, ICC investigates and prepares a report on the findings within 90 days

7.Employer to act on the findings within 10 days of such report of ICC


MythBusters under POSH Act


As stated earlier, most of us do not understand the nuances of these regulations and hence we presume various things which are far from facts. Let us hence try to de-code some of them and put the reality in front of the readers.


-“There are no woman employees in my Entity, so no need for compliance”

The law says that the Act is applicable when you have more than ten employees, and not ten women employees.

“The aggrieved woman has to be an employee in the organisation”

The aggrieved woman need not be an employee. The woman can be a visitor, a vendor, a customer, a bystander, an intern or even a job seeker can complain.

– “The Act is woman centric and can be misused”

Yes, the law is woman-centric but it has various clauses so that men are not falsely accused. The law provides that complaints should be undertaken within 3 months of the date of incident and shall follow the principles of natural justice. Also, in case the ICC finds that the complain is false and malicious the ICC can recommend action against the complainant.

– “Only a NGO Member can be external Member of ICC”

Any person who is familiar with the issue of sexual harassment or a member which is committed to the cause for women can be an external member of ICC.

– “We have a Sexual Harassment Policy and have constituted a valid ICC. Hence, we are fully compliant under POSH Act.”

This is one of the very common mis-conception. One must follow the Act in totality. Every company should from time to time sensitize all employees to the provision of Sexual Harassment Act and hold skill building exercise for the members of ICC. Every company must highlight about the ICC, its meeting, the nature of the complaint received and its outcome in its Annual Report.   

– “The issue has happened outside office and hence the organization is not responsible.”

The word ‘Work Place’ is defined broadly under the Act and includes any place visited by the employee arising out of or during employment. Even transportation provided by the employer can be included in the definition of workplace.

– “Sexual Harassment only includes physical contact.”

Sexual harassment” includes any one or more of the following unwelcome acts or behavior (whether directly or by implication) namely–

i. physical contact and advances; or
ii. a demand or request for sexual favors; or
iii. making sexually colored remarks; or
iv. showing pornography;

Any other unwelcome physical, verbal or nonverbal conduct of sexual nature including-

i. implied or explicit promise of preferential treatment in her employment; 
ii. implied or explicit threat of detrimental treatment in her employment; 
iii. implied or explicit threat about her present or future employment status; 
iv. interference with her work or creating an intimidating or offensive or hostile work environment for her; 
v. humiliating treatment likely to affect her health or safety.

-“Only in head office the policy is to be implimented”

The Policy is to be implemented in every place of business. In other words, not only in head office but also in the branch office the law is implemented.


Implementation of this law will not only help the organization to be a safer place but also increase its reputation among potential employees. All in all, it is the need of the hour that organizations and specially startups and SMEs take this regulation seriously and implement it in the organization in its true spirit and hence Supreme Court once observed-

“the implementation of the Vishaka Guidelines has to be not only in form but also in substance and spirit so as to make available safe and secure environment for women at workplace in every aspect and thereby enabling working women to work with dignity, decency and due respect”


If you have any query in this regards or wish us to implement this in your organization please drop a line at 

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