The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, does not carve out an exception for headcount. A five-person design studio in Indore and a five-thousand-person IT services company in Bengaluru sit under the same statute, though what each must do about it differs sharply once staff strength crosses ten.
Founders and early HR hires often assume the law waits until a company “gets big enough” to matter. It does not. Every employer, regardless of size, carries duties around a written policy, awareness training, and a working complaint channel. What changes with size is which body handles a complaint, what gets filed where, and increasingly, what shows up in a company’s own board paperwork.
Enforcement pressure on this point has increased sharply in the past year, and small companies are not exempt from the scrutiny that follows. Non-compliance is not only a paperwork risk: penalties escalate on repeat violations, and a company’s operating licences can be cancelled or refused renewal.
Where Complaints Go Without an Internal Committee
Workplaces with fewer than ten employees do not need to constitute an Internal Committee, but that is not the same as sitting outside the Act. Complaints from a workforce below the threshold, and complaints where the employer is the respondent, go instead to the Local Committee that each District Officer is required to set up. A written anti-harassment policy, a display of that policy, and at least one awareness session a year remain compulsory regardless of headcount.
Knowing when a Local Committee has jurisdiction and when an Internal Committee does trips up more small businesses than the ten-employee rule itself, a gap TPB’s comparison of the two bodies sets out in detail. Local Committee infrastructure is also uneven across districts. A nine-person company that assumes this safety net is fully staffed and easy to reach is relying on something it has not actually verified.
The Board’s Report Disclosure Rule Most Founders Miss
Since May 2025, POSH compliance has become a matter of public company disclosure, beyond an internal HR file. The Ministry of Corporate Affairs amended the Companies (Accounts) Rules, 2014, requiring companies to state in their Board’s Report whether an Internal Committee exists, the number of harassment complaints received, the number disposed of, and the number pending beyond 90 days, effective from 14 July 2025.
One Person Companies and what the Companies Act separately defines as a “Small Company” are exempt from this rule, a classification defined by paid-up capital and turnover rather than staff count. As of December 2025, that definition covers companies with paid-up capital up to ₹10 crore and turnover up to ₹100 crore. A nine-person startup that closed a funding round pushing its turnover past that mark no longer qualifies for the exemption, even though it comes nowhere near the ten-employee line that triggers an Internal Committee.
Building POSH Compliance Without an HR Team
Most small companies do not have a dedicated HR function to own this process, which usually means the responsibility lands on a founder, an office manager, or whoever already handles compliance filings. None of that changes what the law expects. The sequence below reflects what actually gets checked when a District Officer, an auditor, or an investor’s legal team asks for documentation.
- Draft a written policy that names names: A generic anti-harassment clause pulled from a template will not hold up under scrutiny. A proper POSH policy names the Presiding Officer or the relevant Local Committee, describes how to file a complaint, and sets out a resolution timeline.
- Work out which committee applies, and confirm it in writing: Below ten employees, that means identifying the Local Committee for the relevant district and keeping its contact details on file. At or above ten, it means constituting the Internal Committee by written order, with the external member already on board rather than added after a complaint lands.
- Display it: Courts have upheld fines specifically for failing to put a committee’s composition on a notice board, even where the committee existed on paper.
- Awareness sessions: Run at least one awareness session a year and keep the attendance record. Section 19 makes this a specific statutory duty rather than something to schedule only when time allows.
- File the annual return: Most District Officers expect the Internal Committee’s or Local Committee’s report by 31 January for the previous calendar year, alongside the Board’s Report disclosure described above.
Where Small Companies Get This Wrong
Most failures here are not about malice. They are about sequencing: companies build the committee only after a complaint arrives, which is precisely the scenario the law exists to prevent. Courts have not been forgiving about it: a committee that exists only on paper, with no names displayed and no functioning process behind it, has been treated as no committee at all, and Section 26 penalties have followed accordingly.
A few other patterns recur often enough to name directly.
Confusing a small team with a legal “Small Company” is common enough that company secretaries now flag it during funding rounds, since the two tests, discussed above, answer different questions.
Treating the ten-employee count as fixed is another: a company that dips below ten after a round of layoffs does not lose that year’s obligations retroactively, and one that crosses ten with interns or gig staff during a busy quarter often does not notice it has crossed at all. Skipping the annual return because “nothing happened” during the year is also a mistake. Zero complaints must still be reported. It is a figure in its own right, and silence on the filing looks identical to a filing nobody made.
A functioning committee registered on the government’s SHe-Box portal gives outside stakeholders, including investors during due diligence, a way to verify compliance that a policy document sitting in a shared drive cannot.
What the POSH Act Requires Once a Company Crosses Ten Employees
Section 4 of the POSH Act makes the threshold explicit: any employer running a workplace with ten or more employees must constitute an Internal Committee at that office or branch. The count includes everyone on the rolls: permanent staff alongside contract workers, interns, consultants, and daily-wage employees, all of whom add to the ten.
A studio with five full-time designers and five freelancers on retainer has already crossed that line, whatever the payroll register shows. Its composition follows a fixed shape:
| Requirement | What the Law Sets |
| Presiding Officer | A senior woman employee, chairing the committee |
| Employee members | At least two, ideally with a legal or social work background |
| External member | One, from an NGO or someone working on women’s issues |
| Gender composition | At least half the committee must be women |
| Tenure | Up to three years per term |
Each branch that crosses the threshold needs its own committee, a point covered in more depth in TPB’s breakdown of Internal Committee composition and tenure. A single head-office committee does not cover a company with several locations. The Internal Committee holds the powers of a civil court under the Code of Civil Procedure, and the Act itself requires it to close every inquiry within 90 days of a complaint.
In the End…
A small company does not need a legal department to get this right, but it does need clarity before the next board meeting on whether the ten-employee threshold has been crossed, whether the “Small Company” exemption under the Companies Act still applies, and whether a written policy and a named committee, internal or local, actually exist on file rather than in someone’s memory.
None of this needs a large budget. It needs POSH compliance treated as a standing item on the compliance calendar rather than something drafted into existence after something has already gone wrong.
This article is for informational purposes and does not constitute legal advice. Organisations should consult a qualified legal professional for guidance specific to their situation.
FAQs
Does the POSH Act apply to small companies in India?
Yes. The POSH Act 2013 applies to every workplace in India regardless of headcount. A written anti-harassment policy, display of that policy, and at least one awareness session a year are compulsory even for a workplace with fewer than ten employees.
When does a company need to form an Internal Committee under the POSH Act?
Section 4 requires an Internal Committee the moment a workplace has ten or more employees. The count includes permanent staff, contract workers, interns, consultants and daily-wage employees. Each branch that crosses the threshold needs its own committee.
Where do POSH complaints go if a company has fewer than ten employees?
They go to the Local Committee set up by the District Officer for that district. The Local Committee also handles cases where the employer is the respondent, regardless of company size.
What POSH disclosure is now required in the Board’s Report?
Since 14 July 2025, the Companies (Accounts) Rules require most companies to disclose in their Board’s Report whether an Internal Committee exists, the number of harassment complaints received, the number disposed of, and the number pending beyond 90 days. One Person Companies and “Small Companies” as defined under the Companies Act are exempt.
What is the penalty for non-compliance with the POSH Act in India?
Section 26 provides for a fine of up to ₹50,000 for a first offence. Repeat violations can draw double the fine, cancellation of the business licence or non-renewal of registrations.
