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Managing mental health at work

14 April 2011

Managing mental health at work

Natalie Chyra, Associate

Managing mental health issues improves employee wellbeing, company profitability and ensures legal compliance.

Over the years, mental health issues have become increasingly prevalent throughout Australian workplaces and this has understandably raised legitimate concerns for many employers. Increased working hours, tight deadlines, stressful workplace dynamics, work/life imbalances and commuting to and from work are just some of the factors that contribute to the one in five Australians who suffer from mental illness each year.

HR departments are often the first to be confronted with the complexities of this issue, both on an organisational as well as an individual level, which is why it is imperative for employers to ensure that they have the appropriate knowledge and resources to assist employees who are suffering with mental health issues.

Although there is no federal legislation which specifically governs the treatment of mental illness, most states and territories have legislation in place that similarly define mental illness as a condition that seriously impairs, either temporarily or permanently, the mental functioning of a person, and is characterised by the presence in the person of any one or more of the following symptoms:

  1. delusions;
  2. hallucinations;
  3. serious disorder of thought form;
  4. a severe disturbance of mood;
  5. sustained or repeated irrational behavior indicating the presence of any one or more of the symptoms referred to in paragraphs (a)-(d)1.

Research and statistics

Mental illness affects one in every five Australians. Research completed by the Australian Human Rights Commission for its 2010 Workers with Mental Illness: A Practical Guide for Managers reveals that more than three million Australians experience depression, anxiety or related alcohol and drug problems each year. Depression is currently the leading cause of non-fatal disability in Australia but only 3 per cent of the population identifies it as a major health problem.

Despite these statistics, many employers to their detriment and cost ignore the impact that mental health-related problems can have on their workplace. Beyondblue’s ‘National Workplace Program’ reveals that:

  1. on a national level, businesses lose over $6.5 billion each year by failing to provide early intervention or treatment programs for employees with mental health issues;
  2. stress related workers’ compensation claims have doubled in recent years costing over $10 billion each year;
  3. a total of 3.2 days per week are lost each year through workplace stress2;
  4. each year, undiagnosed depression in the workplace costs $4.3 billion in lost productivity and this excludes WorkCover/insurance claims, the cost of part-time or casual employees, retrenchment, recruitment and training;
  5. in relation to psychological injury claims, work pressure accounts
    for around half of all claims and harassment and bullying for around a quarter of claims;
  6. there are over 18 million absentee days Australia-wide each year;
  7. on average, every full-time employee with untreated depression costs an organisation $9,665 per year;
  8. each employee with depression will, on average, take three to four days off work per month which is equivalent to over six million days lost each year in Australia; and
  9. in addition to absenteeism, depression accounts for more than 12 million days of reduced productivity each year3.

Contributing factors to mental illness

There are various factors that can increase the likelihood of mental illness in workplaces, including:

  • excessive work-related stressors such as poor management or unreasonable performance demands;
  • physical demands such as noise and overcrowding, health and safety risks or ergonomic problems;
  • organisational practices such as lack of autonomy, poor communication, or unclear roles and responsibilities;
  • workplace change such as job insecurity, poor chances for advancement or promotion, or high staff turnover; and
  • inter-office relationships such as competition and conflicts, poor relationships with superiors, or bullying or harassment4.

An individual’s ability to cope and manage with stressors depends on their own behaviour as well as the behaviour and practices of the people around them. Managers and supervisors need to be aware that the way they treat their workers can have a psychological impact on employees and can harm workplace dynamics.

Employers must be aware of the legal pitfalls

The legal pitfalls that employers are exposed to extend far beyond the general OH&S and workers compensation obligations. Employers are probably aware that OH&S legislation across the nation requires them to provide a safe and healthy workplace and to identify the potential hazards that may arise from an unsafe work environment which also extends to employees with mental illness. Breach of these statutory obligations can result in fines and personal prosecution. However, employers can also face claims arising from discrimination, trade practices or even contract claims for failing to provide a safe workplace for employees.

Federal and state anti-discrimination legislation also governs unlawful discrimination in workplaces. Hazards associated with discrimination can stem from bullying and harassment, unrealistic workloads, minimal support from colleagues, lack of control or poorly defined roles, poor relationships due to a lack of knowledge of mental illness and organisational injustice. nuisance

The Trade Practices Act 1974 (Cth) was amended on 1 January 2011 and renamed the Competition and Consumer Act 2010 (Cth) (the “CC Act”). The amendments retained the main provisions of the former act including those relating to misleading and deceptive conduct.

Codes of conduct and company value statements can give rise to an employer being held accountable for the information and wording contained within such documents. If a company’s values include providing a safe and healthy working environment, that may constitute a representation for the purpose of the CC Act to which an employer may be bound.

Employers also face legal pitfalls in relation to contract claims. Policies and procedures may constitute a contract between the employer and employee.

If the company has a dispute resolution policy which sets out the manner in which grievances are handled, poor adherence to the guidelines contained within the policy may result in costly litigation if an employee (for example, suffering with mental illness) is not afforded the correct procedure.

Whether in an OH&S, discrimination, trade practice or contract context, any form of claim can result in a loss of time and productivity and can be very costly to an employer who mishandles an employee suffering from mental health issues.


Bull v Botany City Council [2008] NSWIRComm 1041 highlights the importance of correctly managing an employee with mental health issues. In that case, Mr Bull was employed as the Mayor’s office driver and office assistant regularly working outside of office hours on short notice.

Mr Bull raised concerns with the council’s general manager about the short notice given for overtime and the requirement that he wait in the car until the Mayor was ready to leave from his appointments. Mr Bull was informed he was required to work overtime as part of his job and if he was not going to do it, then he could leave.

Mr Bull agreed to work on the nights of Friday 7 December 2007 and Sunday 9 December 2007. On Saturday 8 December 2007, he became ill and communicated this to his employer.

On Monday 10 December 2007, Mr Bull obtained a WorkCover NSW Medical Certificate which diagnosed him with an “adjustment disorder with anxious mood” as a result of “workplace stress”. The medical certificate provided that Mr Bull would be unfit for work from 10 December 2007 to 14 January 2008.

Mr Bull was terminated for misconduct for not attending his Sunday evening shift and incorrect use of Council provided equipment.

Mr Bull brought an unfair dismissal claim before the NSW Industrial Relations Commission. At the hearing, the Council presented evidence that Mr Bull had been counselled in relation to his attitude and performance, however these were not given as reasons for his termination.

Rather, it was held that the termination was harsh, unjust or unreasonable. Mr Bull’s failure to attend his Sunday evening shift did not constitute serious misconduct and was justified in the context of the medical certificate.

The Commission found that if the Council did not believe the authenticity of the medical certificate, they should have requested that Mr Bull be reviewed by their own doctor (as provided for by the relevant award). Mr Bull was awarded $16,500 in compensation.

Strategy to deal with mental illness

Developing an organisational mental health strategy can reduce employee absenteeism and turnover, increase morale and create loyalty, minimise stress levels and the costs associated with the lack of mental health management including litigation as discussed above.

Increasing awareness through training to improve attitudes and behaviours helps to decrease the stigma attached to mental illness. By having an open workplace that encourages trust, confidence and support, employees suffering from mental health issues will be more inclined to seek assistance to help manage their illness.

There are eight key steps employers should take to risk manage their workplaces:

  1. Ensure all policies and procedures are effective, up-to-date and address the relevant issues through regular compliance checks
  2. Establish systems that regularly monitor conditions in the workplace
  3. Regularly inspect and audit workplace environments and assess the potential for hazards
  4. Promote flexible working arrangements for employees suffering from mental health issues
  5. Develop mentoring and “buddy” systems
  6. Provide access to counselling/ support groups such as an Employee Assistance Program
  7. Educate and train all employees (including management) about the prevalence of mental health issues to promote understanding in the workplace
  8. Ensure legislative compliance by providing safe working conditions through auditing potential hazards
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