Laws Mandating Prevention of Sexual Harassment at Workplace and Female Employment

Sexual harassment at workplace is one of the significant barriers women face in improving their economic outcomes. The *Me Too movement brought to light the high prevalence of this issue across the world. Several countries, including India, have already taken cognizance of this problem and promulgated legislation to prevent and punish such acts of harassment. In 1997, the Supreme Court of India passed a landmark judgment that laid down the Vishaka guidelines – a set of procedural guidelines to be followed by establishments in dealing with complaints about sexual harassment. Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act (POSH Act) went a step ahead of Vishaka Guidelines by redefining the workplace, sexual harassment, consequences of non-compliance, and a time-bound process of complaint resolution.

The POSH Act in India provides prevention and redressal mechanisms against sexual harassment complaints.1 It puts the onus of undertaking measures to prevent sexual harassment and deal with any reported incidences in a quick and fair manner on the employer. The Act was passed by both the parliamentary houses in February 2013 and came into force from December 2013. The act applies to all workplaces in India, including government, private, and non-governmental organizations. Under the POSH Act, 2013, an employer must constitute an Internal Complaints Committee that investigates all sexual harassment complaints reported within the organization. The Committee is required to be formed at each office or establishment of the company that employs 10 or more employees and is required to complete the inquiry within a time period of 90 days.

In this project, using nationally representative employment data at individual level (National employment and unemployment surveys) and panel data for manufacturing establishments in India (Annual Survey of Industries), we aim to identify the impact of the POSH Act on female employment by exploiting the discontinuity along firm size since the Act imposed larger compliance costs for firms having at least 10 workers and the time of implementation. We use a difference-in-differences design to estimate the change in relative female paid employment (vs male employment) in firms having at least 10 employees with those having less than 10 employees, after the passage of the Act. At the firm level, we again use a difference-in-difference strategy exploiting the fact that firms of size 10 or more had to bear the largest compliance cost of the POSH Act. The pre-period constitutes data from 2009-2012, and the post-period constitutes data from 2013-2016. The treatment group is any firm that hires more than 10 workers on average in the pre-period.

Policy Implication: Women are protected from discrimination under the labour laws of India. Further, laws are often enacted to with the aim to protect their rights such as the Maternity Benefits Act of 2017, the Prevention of Sexual harassment Act of 2013 and regulations that restrict their employment in the night shift due to safety concerns. While these laws are enacted with the aim to protect workers, they can backfire and undermine women’s employment if employers’ compliance cost increases with their passage. This study aims to study the impact of one such legislation that aims to protect female workers in India against workplace sexual harassment to examine whether it can lead to unintended consequences. The findings of the study can be used to design and implement public policies that aim to protect female workers without increase cost of compliance for the employers and hence resulting in adverse consequences more effectively.