The POSH Act sets its first duty at ten employees. A workplace with thirty is well past that line, whether or not anyone in the building has the word HR in their title. The law grants no grace period for small size, and it does not wait for a complaint to arrive. The obligation to have a working Internal Committee sits on the employer from the day the tenth person is on the rolls.
POSH compliance for small businesses is narrower than it sounds, and it starts earlier than the size of the firm suggests: at ten. This post is for the owner or manager of a thirty-person unit, an exporter, a job-work factory, a small processing plant, that has a POSH policy printed once and filed and is not certain the rest is in place. What the law asks for is smaller than a compliance department and more specific than a policy on a shelf. Here is the whole of it, in the order a thirty-person business should build it.
POSH Compliance for Small Businesses Begins at Ten Employees
The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013, the POSH Act, requires every workplace with ten or more employees to constitute an Internal Committee under Section 4 [1]. The headcount is not limited to permanent staff on a payroll. It counts workers of every kind at the workplace, including regular, temporary, daily-wage, and contract labour [1]. A factory that runs largely on contract workers can cross ten in a way the owner has not counted, because the paperwork for those workers sits with a contractor rather than with the plant.
Below ten employees the duty does not disappear, it moves. A workplace with fewer than ten, and any case where the complaint is against the employer, is handled by the Local Committee that the District Officer constitutes at the district, rather than by an internal body [1]. For a thirty-person unit the position is simple. The Internal Committee is yours to build and run.
The Internal Committee Composition a Small Company Cannot Shortcut
Section 7 fixes the composition, and none of the four parts is optional. The Presiding Officer must be a woman employed at a senior level at the workplace. There must be at least two members drawn from the employees, preferably people with a background in social work or some legal knowledge. There must be one external member, from a non-governmental organisation or association committed to the cause of women, or a person familiar with issues of sexual harassment. At least half of the total members must be women [2].
Two of these trip up a small firm. A thirty-person unit may have no woman at a senior level to chair the committee. Where that is so, the Act allows the Presiding Officer to be nominated from another of the employer’s units or workplaces, so the absence of a senior woman on one small site is not a reason to leave the chair empty [2]. The external member is the part that gets cut first, usually on cost, and it is the worst part to cut. An Internal Committee assembled without the external member, or without a senior woman as Presiding Officer, is not a valid Section 4 committee, and inquiries run by such a body have been set aside on that ground alone [3]. A committee that exists as three names on a letter, with no external member and no training, gives the employer no protection at the point it is actually needed.
The POSH Timelines That Run Whether or Not You Have HR
Once a written complaint is filed, three clocks start, and they run on their own regardless of how small the company is. A complaint has to be made within three months of the incident, a period the committee may extend by another three months for reasons it records [4]. The Internal Committee then has ninety days to complete its inquiry, and ten days after that to give its report to the employer [4]. The employer has to act on the committee’s recommendations within sixty days [4]. Either party may appeal within ninety days of the recommendation [4].
Separately from any single case, the Internal Committee prepares an annual report for the calendar year and files it with the District Officer, covering complaints received, disposed of, and pending beyond ninety days, along with the action taken [5]. For the year to December 2026 that report is due by 31 January 2027 [5]. Missing it is a breach in its own right, not a paperwork lapse.
For a company without HR, the timeline that slips first is the ninety-day inquiry, usually because the complaint arrives spoken or over a message and no one starts the clock with a written acknowledgement. A single register, dated, holding the complaint, the committee’s meeting dates, and the action taken, is enough to hold the line.
What Non-Compliance Costs Under Section 26
Section 26 sets the price of getting this wrong. A first failure, whether that is not constituting the committee, not acting on its recommendations, or not filing the annual report, attracts a fine of up to fifty thousand rupees [6]. A repeat doubles the fine and opens the door to cancellation of the licence, registration, or government approval the business holds [6].
For a small manufacturer the fifty thousand figure is not the real exposure. The licence consequence on a second offence is, and so is the buyer who asks for POSH records during a social audit and finds a committee that does not meet the composition rule. A failed line in a buyer audit costs more than the fine ever will.
The Newer POSH Duties a Small Company Tends to Miss
Two obligations added in 2025 catch companies that treated a policy and a committee as the end of the matter.
The first is SHe-Box registration. SHe-Box is the central government’s portal for workplace sexual harassment complaints and committee details. Following the Supreme Court’s order of 12 August 2025, which directed state governments to run district-wise POSH compliance surveys and load the data onto SHe-Box, several authorities have gone further and told employers to register their Internal Committees on the portal directly. The Delhi government issued that direction to public and private establishments in June 2025, and sector regulators have issued their own [8]. Registration is quick, and it is increasingly the first thing an authority checks.
The second is a disclosure rule that reaches every incorporated company. The Companies (Accounts) Second Amendment Rules 2025, notified on 30 May 2025 and in effect from 14 July 2025, changed what a company’s Board’s Report has to say about POSH [7]. A bare confirmation that a committee exists is no longer enough. The report now has to state the number of sexual harassment complaints received in the year, the number disposed of, and the number pending for more than ninety days, alongside the company’s gender composition and a statement on Maternity Benefit Act compliance [7]. If the business is a private limited or a limited company, and many small exporters are, this applies to its very next Board’s Report.
Building the System With Thirty People and No HR Department
None of this needs a department. A thirty-person unit can put a defensible POSH system in place in a few weeks by working through it in order.
Start with the committee. Identify a senior woman to chair it, or nominate one from another unit if the site has none, and appoint at least two employee members with women holding half the seats. Bring in the external member next, from a recognised organisation or an experienced practitioner, and put the appointment in writing. Write and circulate a plain POSH policy, display the committee’s names and the consequences of harassment where staff actually gather, and run one short awareness session so the workforce knows the channel exists. Set up a single complaint register and a calendar reminder for the January annual report. Register the committee on SHe-Box. Contract and temporary workers sit inside the scope of all of this, so the induction and the notice board have to reach them too, not only the workers on the direct payroll.
Once that is done, the company is no longer holding a policy and hoping. It has the committee, the external member, the records, and the two 2025 additions that a buyer audit or a district survey now looks for.
FAQs About POSH Compliance for Small Businesses
Does the POSH Act apply to a company with fewer than ten employees?
The duty to form an Internal Committee begins at ten employees under Section 4. A workplace with fewer than ten does not form its own committee. Complaints there, and any complaint against the employer, go to the Local Committee that the District Officer constitutes at the district level [1].
Do contract and temporary workers count towards the ten-employee threshold?
Yes. The headcount covers workers of every category at the workplace, including regular, temporary, daily-wage, and contract labour [1]. A factory that runs mainly on contract workers can be well above the threshold even with few names on its direct payroll.
Can we run an Internal Committee without an external member?
No. Section 7 requires an external member from an organisation committed to the cause of women, or a person familiar with issues of sexual harassment, and at least half the members must be women [2]. A committee missing the external member or the senior woman Presiding Officer is not a valid Section 4 body, and inquiries it conducts can be set aside [3].
What are the POSH inquiry timelines?
A complaint is to be filed within three months of the incident, extendable by three months for recorded reasons. The Internal Committee completes its inquiry within ninety days and reports within ten days after that. The employer acts on the recommendations within sixty days, and either party may appeal within ninety days [4].
What does the Companies (Accounts) Second Amendment Rules 2025 require on POSH?
For companies, the Board’s Report must now disclose the number of sexual harassment complaints received, disposed of, and pending beyond ninety days, together with gender composition and a Maternity Benefit Act compliance statement. The rules were notified on 30 May 2025 and took effect on 14 July 2025 [7].
What is the penalty for not having a POSH committee?
Under Section 26, a first offence attracts a fine of up to fifty thousand rupees. A repeat offence doubles the fine and can lead to cancellation of the business’s licence or registration [6].
Do we have to register on SHe-Box?
Following the Supreme Court’s order of 12 August 2025 directing states to survey POSH compliance and populate SHe-Box, several governments and regulators have directed employers to register their Internal Committees on the portal, the Delhi government among them in June 2025 [8]. Check your own state’s and sector’s position, and register the committee.
SVEGA helps mid-sized manufacturers and exporters stand up the Internal Committee, appoint the external member, and put the records and the 2025 disclosures in place, so that a POSH question from a buyer or an inspector becomes a short conversation. A working system for a thirty-person unit is a matter of weeks, and it answers the buyer’s social audit and the district survey at the same time. You can start a conversation at svegaconsulting.com.
References
[1] Ahlawat and Associates, “Compliance Requirements for Corporates Under the POSH Act,” April 2026, and IncorpX, “POSH Act Compliance Guide for Companies (2026).” On the Section 4 requirement of an Internal Committee at ten or more employees, the routing of sub-ten workplaces and complaints against the employer to the district Local Committee, and the inclusion of regular, temporary, daily-wage, and contract workers in the headcount. Available at: https://www.ahlawatassociates.com/blog/compliance-requirements-for-corporates-under-the-posh-act-key-policies-and-regulations and https://www.incorpx.io/guide/posh-act-compliance-guide-companies
[2] IncorpX, “POSH Act Compliance Guide for Companies (2026),” and The People’s Board, “Internal Committee Under POSH: Composition and Tenure,” May 2026. On the Section 7 composition, a senior woman Presiding Officer, at least two employee members, one external member, and at least half the members women, and the nomination of a Presiding Officer from another unit or workplace where no senior woman is available. Available at: https://www.incorpx.io/guide/posh-act-compliance-guide-companies and https://www.thepeoplesboard.com/hr-compliance/internal-committee-under-posh-composition-tenure-and-external-members/
[3] Commoner Law, “POSH Act India (2026 Legal Guide): Rules and Requirements,” May 2026. On the position that an Internal Committee without the external member or without a senior woman Presiding Officer is not a valid Section 4 committee, and that inquiries by such bodies have been set aside. Available at: https://commoner-law.com/india/workers-rights/sexual-harassment-posh
[4] BTG Advaya, “Statutory Timelines Under the PoSH Act for Investigation,” March 2026. On the three-month complaint window under Section 9, the ninety-day inquiry under Section 11(4), the ten-day report under Section 13(1), the sixty-day employer action under Section 13(4), and the ninety-day appeal window. Available at: https://www.btgadvaya.com/post/statutory-timelines-under-the-posh-act-for-investigation
[5] IncorpX, “POSH Act Compliance Guide for Companies (2026),” and WorkRight, “POSH Act 2013: Complete Compliance Guide for Indian Employers.” On the Section 21 annual report to the District Officer, covering complaints received, disposed of, and pending beyond ninety days, filed by 31 January for the preceding calendar year. Available at: https://www.incorpx.io/guide/posh-act-compliance-guide-companies and https://workright.in/posh-act-2013
[6] Ahlawat and Associates, “Compliance Requirements for Corporates Under the POSH Act,” April 2026. On the Section 26 penalty of up to fifty thousand rupees for a first offence, doubled for a repeat, with possible cancellation of the business’s licence or registration. Available at: https://www.ahlawatassociates.com/blog/compliance-requirements-for-corporates-under-the-posh-act-key-policies-and-regulations
[7] Trilegal, “Companies (Accounts) Second Amendment Rules, 2025,” July 2025, and Bar and Bench, “From Policy to Practice: The Next Chapter in POSH Compliance in India,” October 2025. On the Companies (Accounts) Second Amendment Rules 2025, notified 30 May 2025 and effective 14 July 2025, requiring Board’s Report disclosure of sexual harassment complaints received, disposed of, and pending beyond ninety days, gender composition, and Maternity Benefit Act compliance. Available at: https://trilegal.com/knowledge_repository/trilegal-update-companies-accounts-second-amendment-rules-2025-a-step-towards-transparency-in-welfare-inclusivity-and-financial-disclosures/ and https://www.barandbench.com/view-point/from-policy-to-practice-the-next-chapter-in-posh-compliance-in-india
[8] Plum, “POSH Full Form and Act 2013,” October 2025, and Bar and Bench, “From Policy to Practice: The Next Chapter in POSH Compliance in India,” October 2025. On the Supreme Court order of 12 August 2025 directing state governments to conduct district-wise POSH compliance surveys and onboard data to SHe-Box, and the directions issued to employers to register their Internal Committees on the portal, including the Delhi government direction of June 2025. Available at: https://www.plumhq.com/blog/posh-full-form and https://www.barandbench.com/view-point/from-policy-to-practice-the-next-chapter-in-posh-compliance-in-india
