AS | Ankit Sarawagi|Founder, CFOmatrix·August 2026·9 min read | Payroll & Labour Law |
Most founders meet POSH the hard way: an investor’s diligence checklist asks for your “Internal Committee constitution” and “last annual report,” and nobody in the room knows what either is.
This guide gives you the whole thing in plain language: when POSH applies, how to build a valid committee, how an inquiry runs, and how to file the annual report. Start with the summary, then dig into the section you need.
- When it applies
- A formal Internal Committee is mandatory at 10 or more employees (headcount, not payroll).
- Committee
- At least 4 members, half women, led by a senior woman, plus 1 external member.
- Inquiry clock
- Complaint in 3 months → inquiry done in 90 days → employer acts in 60 days.
- Annual filing
- Report to the District Officer each calendar year (most districts: by 31 January).
- Penalty
- Up to ₹50,000, doubling on repeat, with possible licence cancellation.
1 Does POSH apply to you?
The POSH Act, 2013, protects employees at every workplace, however small. Size does not decide whether harassment is unlawful. It decides which body handles a complaint.
- 10 or more employees: you must set up an Internal Committee (IC) at each office. This is the line most startups cross without noticing.
- Fewer than 10: no IC needed, but a complaint goes to the district Local Committee. Keep a policy and a clear reporting route anyway.
Who counts in the “10”
The count is broad. It includes everyone on the floor, on your payroll or not:
- Full-time and part-time staff
- Contract workers and agency hires
- Interns, apprentices and consultants
It applies equally to private companies, LLPs, partnerships and proprietorships.
Kaveri Labs has 6 full-time employees, 2 interns and 3 designers from an agency sitting in its office. That is 11 people on the floor. Kaveri has crossed the threshold and must set up an IC, even though only 6 are “on payroll”.
2 Building a valid Internal Committee
A wrongly composed IC counts as no IC at all: its inquiries can be challenged and the penalty still applies. Get these five things right.
| Seat | Requirement |
|---|---|
| Presiding Officer | A senior woman employee. None at that office? Borrow one from another unit. |
| Employee members | At least two, ideally with legal or social-work experience. |
| External member | One, from an NGO or familiar with harassment matters. Mandatory. |
| Gender balance | At least half the members must be women. |
| Tenure | Up to three years, then reconstitute. |
The policy and the paper trail
Alongside the committee you need a written POSH policy that defines harassment, explains how to complain, sets timelines and states the consequences. Then:
- Display an abstract of the policy and the IC members’ names prominently.
- Run at least one awareness session and keep the attendance sheet.
- Register the IC on the government’s SHe-Box portal.
In diligence, “we have a policy” means nothing without the display proof and the attendance record.
3 How a complaint and inquiry run
When a complaint lands, the clock starts. The process is time-bound, and missing a step is where employers lose cases.
A complaint reaches Kaveri’s IC on 1 March. The inquiry must finish by about 30 May, the report goes to the employer by 9 June, and the outcome (a transfer, warning or termination) is implemented by early August. Slip any date and the company’s position weakens if the matter is later challenged.
4 Filing the annual report
This is the deliverable investors and auditors ask to see. Each calendar year the IC prepares an annual report and submits it to the District Officer of the district where the office sits.
| Item | Detail |
|---|---|
| Period covered | Calendar year, January to December |
| Deadline | Most districts: 31 January for the previous year (some set a later date, confirm locally) |
| Multiple offices | File a separate report per district where you have a workplace |
| What it contains | Complaints received, disposed, pending beyond 90 days, and awareness programmes run |
| SHe-Box | IC registration and report details updated on the portal where applicable |
Separately, under the Companies Act, 2013, your Board’s report must state that the company has complied with POSH and constituted an IC. Auditors check this line, so it must match reality.
5 What non-compliance costs
Failing to set up an IC, or otherwise breaching the Act, attracts a fine of up to ₹50,000. A repeat offence can double it and lead to cancellation of your licence or registration.
The bigger cost is usually the deal. A missing IC or unfiled report routinely holds up a funding round or acquisition until it is cured, often under time pressure and at a premium.
6 Your setup checklist
- Count everyone on the floor. At 10, set up the IC.
- Appoint a senior woman as Presiding Officer, two employee members and one external member; keep women at half or more.
- Adopt and display a written policy; run an awareness session and keep proof.
- Register the IC on SHe-Box.
- Put the 3-month, 90-day and 60-day clocks in your compliance calendar.
- File the annual report with the District Officer each year, and add the POSH line to your Board’s report.
Not sure which rules apply at your headcount?
Use our free Compliance Applicability Checker: enter your team size, state and set-up, and see exactly which labour, payroll and HR filings you owe now, and which switch on as you grow.
Check my compliances7 FAQs
Does POSH apply to a startup with fewer than 10 employees?
Who counts towards the 10-employee threshold?
By when must the POSH annual report be filed?
Is an external IC member really mandatory?
What is the penalty for not constituting an Internal Committee?
Related guides & templates
Download: POSH policy template for India →
Equal Opportunity Policy under the RPwD Act →
Maternity Benefit Act: what employers must do →
Which compliances apply to your company? (free tool) →
AS | Founder, CFOmatrix | Finance Strategy & Compliance CFOmatrix helps Indian startups build finance, tax and compliance functions that stand up to investor due diligence, from process and controls to the filings and the numbers behind them. |
Disclaimer: This article is general information as of August 2026 and is not legal advice. The POSH Act, its rules and district-level deadlines can change and vary by location. Confirm your specific obligations with a qualified professional before acting.