Several categories of penalties and punishments are dealt with under the POSH Act, which can be classified into two categories: penalizing the act of sexual harassment and penalizing organizations for their failure to comply with legal requirements concerning prevention and redressal measures.

Penalties for Non-Compliance by Employers
have a legal obligation to ensure that the POSH Act is implemented effectively in their workplaces. Severe and adequate penalties are imposed against defaulting employers. That is the intent of these severe penalties to make employers take their responsibilities seriously.

Constituting an ICC:
Undoubtedly, the first imperative of the POSH Act is that an Internal Complaints Committee (ICC) shall be constituted in every workplace having 10 or more employees. If an employer fails to constitute any ICC, they are so brazenly flouting the Act
Such an employer may be levied with a penalty of up to ₹50,000. The monetary penalty doubles as a warning to the employer so that he may ensure that the formation of the ICC is taken seriously as a protection against sexual harassment.
Failure to Act by ICC Recommendations:
After the filing of a complaint, when the ICC does make its recommendations after conducting the investigation, it is the duty of the employer to act upon that. Failure to take any form of corrective or punitive action against the accuser as suggested by the ICC is a violation of the POSH Act
Penalty:
Even the employer can be penalized, and the maximum fine applied against them can go up to ₹50,000, provided that they fail to act according to the recommendation of ICC.
Subsequent violations:
Where a particular employer has committed an offense of violating the POSH Act several times, for instance, by failing to constitute an ICC or not acting by the findings of the same, more severe penalties prevail.
Sanction:
In case of subsequent violation, the sanitation can be increased to double level and even in extreme conditions, the government can cancel the license, registration, or other statutory business benefits of an organization.
Annual Reporting Non-Compliance:
Every employer shall send in writing to the District Officer concerned, an annual report of complaints related to sexual harassment received and dealt with by the ICC. The failure to file such a report is held to be a violation of the Act.
Penalty:
The non-filing of the annual report amounts to penalties, but repetition over time will result in identical fines as above.

What are the Penalties and Punishments under the POSH Act?
If the ICC holds the employee responsible for sexually harassing, the appropriate action should be taken by the employer. Punishments handed out to individuals differ according to the offense as well as the policies of the organizations. This may include:

Written Apology or Formal Warning: The ICC can recommend giving a formal warning or written apology to the complainant if the offense is minor and a first-time offender.
Reduction of Salary and Compensation: The accused may be given a reduced salary as compensation to the complainant wherein it is recommended by the ICC especially if the complainant experienced economic consequences such as missed promotions or foregone opportunities from the harassment.
Demotion or Transfer: In other instances, ICC may even propose demotion or transfer of the accuser to some other department or place such that the comfort and safety of the complainant would be maintained in that particular context.
Suspension or Termination: In case of a serious offense, the ICC can provide suspension or dismissal of employment against the harasser. The employer has the legal obligation to act on these proposals.
The POSH Act largely aims to safeguard the female gender against sexual harassment, but at the same time keeps open avenues for misuse. The Act defines false and vexatious complaints under different heads and the power of penalties against fraud perpetrators.
Penalties on Frivolous Complaints: In case the ICC decides that the complaint was brought maliciously or without cause, it may also recommend appropriate proceedings against the complainant. Failure to substantiate a complaint is not malicious intent.
Punishment: Punishments against false complaints may range from a written warning to suspension up to termination. The extent of the punishment varies according to the gravity of misconduct. However, care must also be taken not to punish those who complain bona fide.

Penalties for breach of confidentiality
The POSH Act is based on the principle of confidentiality. A complainant as well as the accused has the right to have his identity kept confidential till the investigation is concluded. Any violation on the part of members of the ICC or any other participant of the process at any level invites liability under this act.
Any form of breach of the confidentiality agreement is likely to attract disciplinary actions against the offending party. A fine, suspension, or any other penalty that will be deemed fit by the employer or relevant authority can be stipulated.
Others: Where the ICC identifies systemic issues or systemic compliances within the organization, then punitive measures beyond financial penalties can be employed by the government.

License Cancellation: In extreme cases of repeated or egregious violations, the government can cancel an organization's license to operate or withdraw various government benefits and exemptions.
Civil or Criminal Proceedings: POSH also permits further civil or criminal proceedings against the accused. For example, complaints may be lodged under other provisions of laws like the Indian Penal Code (IPC), if there have been offenses of molestation, stalking, or assault.