The sharp rise in pending cases does not provide any comfort even as we skew the number of companies. Among Nifty companies, there were 165 pending cases out of a total complains of 883 cases in FY23.
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ompanies are tightening disclosures, compliance and governance norms, with investors worldwide increasingly influencing their money bets on clean and transparent businesses. However, while companies are trying to create safe, secure and non-discriminatory workplaces in India, sexual harassment cases at workplaces show a concerning trend, something which may require stakeholders’ attention.
The number of pending sexual harassment cases at workplaces in India’s largest companies shows an alarming rise of 101 percent in the year ending March 2023, indicating a huge backlog of complains and the companies’ inability to resolve such cases in a timely manner. There were 147 pending cases out of a total of 772 complains in FY23, shows a Forbes India analysis based on company annual reports, data compiled by anti-sexual harassment advisory firm Complykaro.com. This analysis considers only companies in the BSE100 ESG Index.
No doubt the rise in pending cases is also due to a higher number of overall complains in these companies year-on-year. The analysis shows there were 73 pending or unresolved cases in FY22 on 520 complains. Similarly, in FY21 and FY20, pending cases were 73 and 89 on complains of 416 and 649 respectively.
According to Vishal Kedia, founder and director of Complykaro Services, a rise in the number of complaints would indicate that employees are increasingly becoming aware and feeling empowered to come forward and make sexual harassment complaints before Internal Complaints Committees (ICCs). However, since ICCs are not resolving the complains quickly, it would have a dampening effect on employees’ willingness to air their grievances as they would want prompt and fair resolutions, he adds.
“This could signify that the ICCs are not trained adequately to resolve the complains in the shortest possible time. It is, therefore, mandatory for ICC members to undergo skill building and training programmes annually,” he explains.
However, the number of unresolved cases is sharply higher in the BSE100 Index, which account for over 65 percent of the total market capitalisation of listed companies in India. At the end of FY23, there were 205 pending cases on total complains of 1,186, while there were 112 pending cases on complains of 814 cases in the previous year.
Nidhi Singh, partner, IndiaLaw LLP feels the reason for an increase in cases could be because most top companies mandated their employees to return to office after the pandemic. She adds that bigger companies invest more in the deliverance of justice rather than a simple resolution of the dispute. Therefore, while smaller companies may coax complainants into accepting a settlement, bigger ones would prefer to engage wholeheartedly in the enquiry and then come to conclusions.
“If the offence is proved, it would result in the suspension or retrenchment of the delinquent employee. Companies, such as those on major stock exchange indices, are primarily focussed on business results; thus, they may be hesitant to punish their employees, as this could publicly and negatively impact the business. This could be another reason for keeping such complaints pending rather than completing the inquiry and imposing the penalty,” Singh adds.
Another reason could be that companies have already shown leniency towards delinquent employees, she says. “This would have resulted in greater confidence in their actions, and that would cause dire consequences. Hence, the leniency shown earlier could have resulted in more offences being conducted. Thus, more complaints,” Singh explains.
The sharp rise in pending cases does not provide any comfort even as we skew the number of companies. Among Nifty companies, there were 165 pending cases out of a total complains of 883 cases in FY23. This compares to a total of 600 cases with 82 unresolved cases in the previous year.
The increase may indicate a growing awareness of workplace harassment issues, leading to more employees coming forward to report incidents, says Mayank Arora, partner, Chambers of Bharat Chugh. “Additionally, it could be a result of more stringent enforcement of regulations, which may lead to a higher number of reported cases. It may also imply that cases are now not being buried under the carpet. There may be a backlog of unresolved cases within these organisations due to delays in conducting investigations, legal complexities, or challenges in obtaining evidence etc.”
However, Kedia does not attribute the higher number of pending cases to the unwillingness of companies and ICCs, but holds the companies and ICCs accountable for their inability to resolve cases faster. “As far as the company is concerned, some believe that doing ICC training annually in the absence of any complaint is a waste of money and hence when ICCs receive complaints, they are totally unprepared. On the other hand, ICCs typically consists of senior employees who are hard pressed for time in general and when any complaint comes, they do not address the complaints with the urgency it deserves. I feel most complaint resolutions get delayed due to non-availability of ICC members as they are unwilling to conduct hearing on day-to-day basis,” Kedia explains.
The Supreme Court defines sexual harassment as any unwelcome, sexually physical, verbal or nonverbal conduct. Examples include suggestive remarks about women, demands for sexual favours, and sexually offensive visuals in the workplace. The definition also covers situations where a woman could be disadvantaged in her workplace as a result of threats relating to employment decisions.Also read: Rise in sexual harassment cases in India's top companies shows dichotomy
Why is it concerning?
It is the company's responsibility to ensure that ICCs resolve the complains within 90 days. Though the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, commonly called the Posh Act, prescribes a maximum of 90 days to complete the inquiry, no penalty is imposed on the company or the ICC if this is not adhered to. In case the company believes the ICC is not fulfilling its responsibility, it is obligated to re-constitute the ICC with more committed members. “Further, the company and its management can also be prosecuted criminally as the delay would amount to contravention of the provisions of Posh Act,” says Kedia.
When the case is not resolved within 90 days, the complaint can request the ICC to expedite the inquiry, escalate it to the Ministry of Women & Child Development through its website and/or file a criminal complaint before the metropolitan magistrate. Additionally, the complainant may also prefer a private complaint under Section 190 of the Code of Criminal Procedure, 1973 alleging the commission of an offence involving sexual harassment, as defined under Section 354A of the Indian Penal Code.
“It is extremely important that ICC members clear their work schedule after receiving a complaint and conduct the inquiry on a day-to-day basis. Equally, it is important that companies implement the ICC's recommendations immediately, which they are legally obligated to do within 60 days,” elaborates Kedia.
The Posh Act has criminalised acts of sexual harassment, stalking and voyeurism, and aims to prevent and protect women against sexual harassment at workplaces and ensure effective redressal of complaints. The Act mandates companies to establish ICCs that are responsible for grievance redressal. Under the Companies Act, 2013, and the Listing Obligations and Disclosure Requirement (LODR) 2015 of the Securities and Exchange Board of India (Sebi), companies are mandated to report the number of sexual harassment cases in their annual report.
According to Arora, a rise in the number of pending cases may not be only due to procedural delays. A review of the CRB Report 2021, released in August 2022, shows that crimes against women increased by 15.3 percent from 2021, and increased from 56.5 percent in 2020 to 64.5 percent in 2021 (incidents per 1 lakh population). Nearly 31,000 complaints were received by the National Commission for Women (NCW) in 2022, the highest since 2014.
“The above data, when placed together with the rise in Posh cases, reveals a somewhat disturbing trend. Crimes against women, especially sexually related ones, are on the rise and something needs to be done urgently to contain this,” Arora adds.
Will it influence ESG ratings?
What is more alarming is companies that are listed on the BSE100 ESG Index have a high number of pending cases. Since corporate governance is an essential part of ESG norms, can this impact the ratings of a company?
According to Swati Agrawal, CEO, CareEdge Advisory and Research, if a company has a high number of pending Posh cases, it may indicate potential gaps in effective implementation of its Posh policies. “This could adversely impact the company’s performance on social indicators on labour and human capital management. However, it needs to be also evaluated on the timelines taken to resolve these cases. A higher number of such incidents being reported can also be construed as a step towards transparent disclosures of labour management practices. Resolving them in a time-bound manner is a critical input,” says Agrawal.
Interpreting the increase in cases also need to account for the nature of the cases, the jurisdiction, the organisation or system involved, and the overall context. While it can indicate potential problems or challenges, it doesn't necessarily imply guilt or wrongdoing. Effective mechanisms to address root causes and resolving pending cases promptly and fairly is crucial in managing these situations effectively.
“While rising cases is certainly an alarming situation and needs immediate attention from stakeholders, its overall impact on ESG assessment is also dependent on various other factors, such as number of pending cases, trends, methodology applied to measuring impact and weights of such factors in ESG assessment,” adds Agrawal.
Also read: 'Women no longer hide behind silence, stigma'
How are companies stepping up?
According to Shaji Mathew, group head, Human Resource Development, Infosys, the company has stringent zero-tolerance and non-retaliation policies, and drive a culture of ‘Speaking Up’, so that employees are able to report their grievances to ICCs. “Our numbers are lower than cases reported pre-pandemic. While across industries, the number of Posh cases significantly reduced during the pandemic, they gradually rose with the resumption of hybrid work. At Infosys, there are continuous awareness and education sessions on Posh that help us maintain focus on creating a positive and safe work environment,” Mathew adds.
The increasing number of cases is primarily reported in industries that depend on large workforces, such as financial services and information technology. With 78 cases, Infosys reported the highest number of cases in FY23 among Nifty companies, followed by Tech Mahindra (74 cases), Wipro (70 cases) and HDFC Bank (68 cases).
Among BSE100 ESG companies, Wipro has the most pending cases (19) while HDFC Life Insurance Company and Kotak Mahindra are next with 14 pending cases each in FY23. In the same financial year, Wipro reported 70 cases, HDFC Life 60 cases and Kotak Mahindra 56 cases. HCL Technologies had 16 unresolved cases on 55 complains in FY23.
“We received a higher number of cases in the last two quarters of FY2022. To ensure that each case is evaluated fairly, ICCs need proper time and attention. We are glad to share that all the open cases of FY23 were appropriately closed in Q1 of FY24 within the defined turnaround time without any delay,” says Vibhash Naik, CHRO, HDFC Life. He adds that the Posh Act is very progressive, but still has some road to cover with reference to its awareness, implementation and acceptance.
The annual report data is at a given point in time, and the number of pending cases can get affected by the time of occurrence of the cases and their pending investigation as per requirement.
In FY23, Tata Steel reported 38 cases compared to 22 in the previous year, while 10 and 4 cases were unresolved in FY23 and FY22 respectively. The growing emphasis on diversity, equity, and inclusion (DEI) in workplaces has led to an increased awareness of Posh issues, says a Tata Steel spokesperson. While there is an overall increase in the number of cases, the high-severity cases have decreased over the years. An increase in the number of low-severity cases is a reflection of improved awareness among employees and their ability to identify and report Posh inappropriate behaviour, the spokesperson adds.
“All the pending cases for FY23 were reported in the month of February-March 2023 and hence were carried forward to FY24. All of them have been closed within 90 days. The pending cases are regularly monitored and reported to ensure they are closed within 90 days,” the Tata Steel spokesperson adds.
A Kotak Mahindra Bank spokesperson says that any complaint pertaining to sexual harassment is diligently reviewed and investigated and treated with great sensitivity. “Our ICC members have been trained in handling and resolving complaints and have also designed an online e-learning Posh Awareness module, which covers the larger employee base. We also leverage our learning platform to impart training on various policies instituted by the bank, including Posh, which is mandatory and assigned to all our employees during their induction sessions and on an annual basis” the spokesperson adds.
However, the core issue is not the reporting of cases but rather their addressal in an effective and timebound manner. Therefore, organisations need to enhance their capability to mitigate this growing number of pending cases.