What HR often treats as a “safe” decision can actually create legal exposure!

The situation

An employee files a PoSH complaint and shortly thereafter resigns. At this stage, HR faces a practical question: Should Full & Final (F&F) settlement be processed as part of the exit, or held until the inquiry concludes?

In many organisations, settlement is delayed, effectively linking exit timelines to the PoSH inquiry.

Why this happens

In our experience advising organisations, this decision is usually driven by four common decision pressures:

• Closing both processes together: A preference to complete the PoSH inquiry before formally closing the exit.

• Perception risk: Concern that processing the F&F settlement may be seen as undermining the complaint process under PoSH.

• Evidence preservation – HR wants to ensure documents, emails, and witness records are preserved before the employee leaves.

• Post-exit disciplinary uncertainty- Difficulty in acting if misconduct is established after the resignation.

In some cases, this even spills into exit discussions, where employees are informally asked whether the complaint will continue before settlement is processed. But legally, these are two separate processes.

What the law actually requires

The timelines don’t align, and that’s where the issue begins.

• Under the PoSH Act (Sections 9, 11, 13), the Internal Committee must complete the inquiry in 90 days. (regardless of resignation.)

• Under Section 17(2) of the Code on Wages, 2019 exit wages payable to a resigning employee be paid within two working days of separation.

In effect:

• Labour law–mandated exit settlement: 2 days

• PoSH inquiry: up to 90 days

These timelines are not optional, and they are not connected. Linking them together can delay wage payments beyond the statutory timeline, potentially exposing employers to regulatory action.

What are the risks for employers?

1. Wage law breach- If settlement is delayed until the PoSH inquiry concludes, wages may be paid months after exit—well beyond the timeline mandated under the Code on Wages, 2019. This can trigger scrutiny from labour authorities.
2. Pressure on the complainant- Linking settlement timelines to whether the complaint continues can create a perception that the employee must withdraw the PoSH complaint to access final dues. This raises concerns of interference with the inquiry process under PoSH.
3. Retaliation allegations- Altering exit terms after a PoSH complaint is filed may be interpreted as retaliation for reporting sexual harassment, exposing the organisation to legal challenge and scrutiny of its complaint-handling process.
4. External escalation and PoSH scrutiny- Delaying settlement while a complaint remains pending may push the matter towards external reporting channels, triggering closer scrutiny of the organisation’s PoSH compliance.

What begins as an administrative decision can then quickly become a legal concern.

What HR should do

When a PoSH complaint overlaps with an employee’s exit, the principle is simple: the two processes must remain separate.

• Continue the PoSH inquiry. The Internal Committee must complete the inquiry under the PoSH Act. Resignation of either party does not affect this obligation.

• Process exit settlement independently. F&F settlement must follow statutory timelines under the Code on Wages, 2019.

• Manage the transition carefully. Ensure that documents, evidence, witness statements, are preserved before the employee leaves.

Why this matters more now

External reporting is no longer a fallback: it’s becoming routine.

With the integration of the SHe-Box portal into the Mission Shakti framework (April 2026), access to external reporting has expanded significantly, something many organisations are still underestimating.

Most organisations haven’t fully caught up with what this means in practice – We broke it down in last week’s newsletter.

Complaints routed through SHe-Box are escalated to the appropriate authority for action under the PoSH framework, placing the organisation’s handling of timelines, inquiry conduct, and exit decisions under external scrutiny.

The takeaway is simple: Organisations must ensure clear and legally compliant handling of both processes, without linking them.

How SHLC can help

If you’re dealing with a PoSH complaint during an employee exit, the way timelines are handled can create unintended legal risk.

We help organisations fix this in real time, before it turns into a compliance issue.

📩 contact@shlc.in | 📞 +91-9625392040

Disclaimer: This post is for general informational purposes only and does not constitute legal advice.