Founders and Promoters Under POSH: Employer Duty or Potential Respondent?

Founders occupy an unusual position under the POSH Act — they are simultaneously the "employer" charged with ensuring compliance, and, in some unfortunate cases, the person a complaint is filed against. Both roles carry distinct legal consequences, and conflating them is a mistake we see even in otherwise well-run startups.

The founder as "employer" — a non-delegable duty

Section 2(g) of the POSH Act defines "employer" broadly to include the head of the organisation, or any person responsible for the management, supervision, and control of the workplace — this squarely captures founders and promoters, regardless of their formal designation. As employer, a founder carries direct, personal statutory obligations, including:

• Constituting a valid Internal Committee if the organisation has 10 or more employees.
• Providing a safe working environment under Section 19, including facilities for the IC to function.
• Assisting in securing the attendance of the respondent and witnesses.
• Filing the annual report with the District Officer, and taking action on IC recommendations.

Delegating day-to-day HR execution to a People or HR lead does not transfer this underlying legal responsibility. If the IC is never constituted, or the annual report is never filed, the founder — as the person with ultimate control over the workplace — bears the compliance failure, not merely the HR team executing it. We cover the specific penalties for these failures in our post on penalties for POSH non-compliance.

Can a complaint be filed against the founder?

Yes — unambiguously. Nothing in the Act exempts the employer or a founder/promoter from being named as a respondent. In fact, the Act specifically anticipates this scenario: where the complaint is against the employer himself, Section 6 directs the complainant to the Local Committee rather than the company's own Internal Committee, precisely because an IC that ultimately reports to, and depends on, the very person accused cannot be expected to investigate them impartially.

This holds true even in companies with fewer than 10 employees, where the complaint would ordinarily need to go to the Local Committee regardless — and remains true for larger companies too, where a complaint naming the CEO, founder, or promoter is still properly routed away from the in-house IC to the district's Local Committee.

Why this matters more for startups than founders often assume

In a small founding team, the founder is frequently also the most senior, most visible, and most socially central person in the organisation — the exact profile of person against whom power-imbalance-driven harassment complaints are statistically more likely to arise. Founders sometimes assume that because they "built the company culture" or have close personal relationships with early employees, a formal complaint against them is unlikely or would be handled informally. Neither assumption changes the legal position: if a complaint is made, it goes to the Local Committee, and the founder is treated as any other respondent under the Act — subject to the same inquiry process, the same confidentiality obligations, and the same potential consequences.

Governance implications: board and investor exposure

For funded startups, a POSH complaint against a founder has implications well beyond the individual case. Investors and boards increasingly treat the existence — and handling — of such complaints as a material governance matter, sometimes triggering disclosure obligations under shareholder agreements, and always affecting future fundraising diligence. We touch on how this connects to formal governance disclosures in our post on POSH disclosure in board reports and annual returns.

Practical governance recommendations for founder-led companies

• Build the IC (or identify the correct Local Committee) before you need it — waiting until a complaint actually arises to figure out jurisdiction wastes precious time under the 90-day clock.
• Don't let the founder chair or sit informally over IC matters, even for complaints not involving them directly — this undermines the committee's perceived independence and can taint otherwise valid findings.
• Get early legal guidance the moment any complaint touches a founder or promoter, given the jurisdictional shift to the Local Committee and the governance sensitivities involved.
• Maintain the same documentation discipline — appointment orders, policy, annual reports — regardless of company size, since founder-involved matters attract disproportionate scrutiny if they ever surface publicly.

Key takeaway

A founder wears two hats under the POSH Act: the employer bearing non-delegable compliance obligations, and a potential respondent subject to the same accountability as any other person at the workplace. Neither hat offers an exemption, and complaints against a founder are specifically routed to an external body — the Local Committee — precisely because the law recognises that internal impartiality becomes impossible once the person accused is also the person in charge.