I bet you have not given a thought to – how an incident of sexual harassment at the workplace can affect your company. It is for your best interest to get this clear, right here. Companies growth have been affected adversely whenever any such incidence comes to light.  Prevention of sexual harassment is not just a ‘female concern’ or HRs KRA. Involving every personnel in the prevention of sexual harassment at work is the required move forward.

Users share that after PoSH compliance there is a notable decrease in the number of sexual harassment incidents. Sensitization training has helped various organizations in making workplaces safe and secure.

On the other hand, few organizations & individuals have faced consequences of non-compliance to the PoSH law.

Are Investors And Directors Liable For Non-Compliance?

According to Section 134 of The Companies Act 2013, the directors have to devise proper systems to ensure compliance with provisions of all the applicable law and that such systems were adequate and operating effectively, including the PoSH law.

Non-compliance to the PoSH law can have several consequences for individual directors such as –

• A financial penalty of nearly fifty thousand rupees which can go up to twenty-five lakhs
• Imprisonment for as long as three years
• Both financial penalty and imprisonment
• If a director is imprisoned for a period of more than 9 months then he/she can’t stand for directorship for a period of 5 years

The increasing awareness about the PoSH law has been fruitful for investors and directors. Finally, they now understand the considerable risk involved in non-compliance to the PoSH law.

“For a while, investors were able to say that they couldn’t address what they didn’t know about,” says Stu Dalheim, director of engagement at Calvert Research and Management, a unit of Eaton Vance.

When investors sign an agreement to invest in a company, it is a standard practice to look at all sorts of compliances. The implementation of the Prevention of Sexual Harassment Law is one factor. However, it only remains a formality of ticking checkboxes. Reason being, an investor do not have any legal liability to non-compliance. But now everybody is aware, any incident of sexual harassment does bring a lot of bad press to the investor’s door.

Drop in Investment Valuation

Incidents of sexual harassment directly impact the reputation of a company. Once a company is associated with sexual harassment at the workplace, it gets difficult to reverse the brand image in the public eye. Given the information stays on the internet forever.

The buck does not stop here. The whole situation impacts the company’s profit and third-party investments. A hit for the brand image means a decrease in the market value of its assets or sales directly impacting the investors and their profits.

Thus incidents of harassment can lead to uncertain future valuations of your company. And hence a drop in the investment prospects.

Consequences Of Non-Compliance

On Brand Image

In October 2018, AIB’s founding member, Gursimran Khamba, was accused of sexual harassment and breach of consent. While the case remains unresolved with Khamba denying any ‘breach of consent’. The organization had to face the fire following the anonymous sexual harassment complaint.

Later that week, the company issued a statement which concluded that Mr. Khamba has been asked to go on a ‘temporary leave’. In addition, CEO, Tanmay Bhatt stepped down from his position.

However, that wasn’t the end. Several online streaming channels including Star India took down AIB’s shows from their platforms.

Star India also canceled their future associations with AIB. Hotstar released a statement, “We are deeply concerned by these developments, which run contrary to our values as a responsible platform, and will not stand by anything that compromises the respect or safety of women.”

On Funding

In March 2015, Ola acquired rival TaxiForSure for $200 million. After investing in its growth for almost a year, Ola began diverting resources from its subsidiary to grow itself. Reason being, TaxiForSure could not raise funding following the Delhi rape case involving a driver.

Post the Delhi rape case,  the government shut down all online taxi services including Ola and Uber unless they acquire a license. This lead to a high loss for all investors in the mentioned companies affecting their turnover and profits.

A single sexual harassment incident affects not only the company involved in the case but also the competitors present in the domain.

Social Media And Workplace Sexual Harassment

A company is a legal entity run by a specific individual or a set of individuals. And the directors and investors are the individuals behind a company. Which brings them to the center of attention when a finger is pointed towards the company.

Following the #MeToo movement in India, companies involved have faced backlash on social media. The reason? Most sexual harassment victims prefer to stay anonymous. And social media is the only platform that allows them to hide their identity while reaching out to a large audience for aid.

“Social media is involved in some aspect of each harassment complaint I’ve dealt with recently. Whether it is the source of the report itself or if it contradicts the employee’s claim,” said HR consultant Kate Bischoff.

Protect Yourself and Your Investment

Take action to protect yourself and your company from the consequences of sexual harassment at the workplace. Encourage the employees to report sexual harassment through assigned channels within the company. Providing an internal channel will discourage them from speaking up on social media.

Forming an Internal Committee and sensitizing the employees on PoSH law is the need of the hour.

Ensure PoSH compliance in your company today to make it a safe workplace for women. Protect yourself from the harsh consequences of non-compliance.

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