POSH compliance disclosure now part of annual Director Report filed with ROC

Sexual harassment of women at their workplaces is a rampant and distressing issue which needs to be curbed at all costs to maintain the sanctity of the workplace. Harassment against women is the biggest hurdle in the march towards equality of the sexes. It not only undermines the confidence of women to work freely, it completely submerges the most basic fundamental rights engraved in the Constitution of India – the right to life, right to equality, and the right to live with dignity.

As an estimate by the National Commission for Women in 2017, around two women are harassed each day in their workplaces. The sad reality is that there has been a rise of about 45 percent in such cases, and mostly, fearing the repercussions, women avoid reporting instances, especially if the harassment is by a senior at work.

Mandatory compliance – Ministry of Corporate Affairs notification

In an attempt to enable a safe working environment for women, the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act and the Rules (collectively known as POSH Laws) have been enacted and passed by the Ministry of Women and Child Welfare, in the year 2013. These laws are applicable upon every workplace, establishment, company, and organization, inclusive of MNCs, firms, shops, restaurants, etc.

Each organisation with more than 10 employees is required to form an Internal Complaints Committee headed by a “female presiding officer”, along with the formulation of an internal POSH policy for the prevention and redressal of sexual harassment at workplaces. Orientation and training programmes are also required to be carried out by the organisation. The organisations are also required to file an annual report with the information of the number of sexual harassment complaints received in a year, the number of complaints disposed of in a year, cases pending for more than 90 days, etc.

The Ministry of Corporate Affairs, through a Notification dated July 31, 2018, amended the Companies (Accounts) Rules 2014, in accordance with the request made by the Ministry of Women and Child Welfare. By this amendment, it is now mandatory to disclose that the company has implemented the provisions of the Sexual Harassment Act. It is now compulsory for a company to make a statement in the Director’s Report that it has complied with the provisions regarding the constitution of the Internal Complaints Committee (ICC).

This amendment comes as a major step towards making the workplaces in the private sector safer for women, thereby casting higher responsibility on the Board of Directors to ensure compliance under the POSH Laws. Penal provisions that ensue in case of non-disclosure under Section 134 of the Companies Act will now be levied in the matters of non-disclosure of the implementation of the Sexual Harassment Act as well.

What is sexual harassment

Sexual harassment at workplaces can be divided into two broad categories. The first is quid pro quo, i.e., when a designated senior demands sexual favours from a female employee in return for a favour (for example, promotion). The other kind of sexual harassment is when a co-worker repeatedly does certain unwanted acts of a sexual nature, thereby making the work environment for that particular female hostile. This includes sexual pranks, favours, inappropriate touching, joking, verbal/non-verbal advances, etc.

The POSH Act aims at ensuring that each woman walking into any organization has a forum where she can seek redressal when faced with sexual harassment. The ICC acts as that forum for organisations having above 10 employees. The Local Complaints Committee is the first step for seeking redressal in organizations having below 10 employees.

Implications of non-compliance

Non-compliance with POSH in terms of failure to constitute an ICC can cost an employer a monetary penalty of Rs 50,000, apart from attracting penalties for non-disclosure in the Director’s Report. In case the employer repeats a breach under the Act, he shall face twice the punishment or even cancellation/non-renewal/withdrawal of registration/license required for carrying on business or such activities.

It has been seen that if an aggrieved employee drags the matter to the courts for compensation, the employers have had to pay exemplary damages. Strict stance has been taken against companies by the Courts if they find out that the company was not POSH-compliant. For instance, the Madras High Court, in 2016, had ordered the Chennai-based ISG Novasoft Tech Ltd to pay Rs 1.68 crore as damages in virtue of sexual harassment faced by a female employee.

As a matter of fact, lacking POSH compliance can also harm the reputation of the organisation/company. If the matter reaches the court, or even if the female employee complains, the reputation of the company is at stake. It may lead to the organisation being labelled as an “unsafe workplace” for every other employee, thus making it hard not only to hire future employees but also negatively affecting the business of such an organisation.

Instances of sexual harassment at the workplace

There have been some instances of sexual harassment at workplaces which have gained limelight, among manifold others that go unnoticed. For example, at the end of July 2018, a leading political party’s social media wing executive was arrested for sexual harassment on the basis of an FIR filed by a former colleague.

In another instance from June 2018, the Sports Authority of India (SAI) had received a set of three complaints from three different regional centres of SAI for sexual harassment. This resulted in the sacking of one coach, launching an internal probe against another, and ordering compulsory retirement of an employee.

In yet another unfortunate instance, a woman employee working in a multinational pharmaceutical company as an area manager filed a sexual harassment complaint at the police station against the General Manager and Regional Manager. Her initial complaints were made to the company’s redressal cell and the top management, who failed to take an action against the employees, and hence she was left with no option but to approach the police.

In August 2018, the Union Women and Child Development Ministry, being unsatisfied with the way Air India has handled sexual harassment complaints, had called the Chairman and Managing Director to explain the reasons for the delay. Air hostesses had complained in writing to Maneka Gandhi, Union WCD Minister, alleging that the ICC had delayed investigating the matter.

As can be seen, the Government is taking strict measures to ensure that each organisation complies with laws against sexual harassment in order to make the workplaces safer for women.

Rohan Mahajan is Founder of LawRato.com.

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)