Apr 3, 2025 • 8 min read
What Employers Need to Know About Workplace Mental Health
Mental health challenges are on the rise. Explore strategies to improve corporate wellbeing and reduce workers comp claims in the modern workplace.
Written by: Eisabess Chee
In today’s rapidly evolving work landscape, mental health has emerged as a critical business concern that directly impacts your bottom line.
Understanding this shift is more important than ever; it’s the key to protecting your organisation’s productivity, finances, and talent retention.
The Alarming Rise of Workplace Mental Health Issues
Mental health challenges in Australian workplaces are increasing at an unprecedented rate.
While suicide rates among working-age Australians have remained relatively stable, there’s been a significant spike in mental health symptoms, particularly among workers under 25. The pandemic has only accelerated this trend, with extraordinary levels of uncertainty and stress reshaping how employees experience work.
According to the Australian National Health Survey by the Australian Bureau of Statistics, the rates of psychological distress are increasing significantly. This aligns with Safe Work Australia’s finding that mental health conditions now account for 10.5% of all serious claims.
Despite this alarming trend, a 2020 gap analysis revealed that risk assessment, preventative action, and identification of common mental health issues are still poorly addressed in Australian workplaces.
Why Modern Work Environments Create Mental Health Risks
Digital Transformation and Blurred Boundaries
Since 2000, the shift from paper to digital has created more flexible options but blurred the boundaries between professional and personal life.
Digital work environments often create expectations of constant availability, increasing psychological demands while reducing ability to disconnect. Research shows that 70% of remote workers performed their duties outside normal working hours during lockdowns.
Without physical separation between office and home, many struggle to disengage from work, contributing to rising stress levels and potential burnout.
Employment Insecurity and Psychological Safety
The rise in casual employment and gig work has created a trade-off between flexibility and security that affects mental wellbeing. With declining permanent full-time jobs, many workers—particularly younger Australians—face uncertainty that directly impacts their psychological health.
The gig economy, now valued at approximately $6.3 billion in Australia, presents particular challenges. While offering flexibility, gig workers operate without basic entitlements or guaranteed work, creating unique psychological pressures that contribute to mental health concerns.
Technology-Driven Anxiety
Technological advancement brings another dimension to workplace mental health. Automation and artificial intelligence have polarised the job market, with middle-skilled workers facing the highest risk of displacement. A 2019 survey by the Australian Council of Trade Unions (ACTU) revealed that over half of Australian workers fear changes to or loss of their roles due to automation.
These anxieties aren’t unfounded. Manufacturing lost 92,000 Australian jobs over a decade, while healthcare gained 462,000 roles in the same period. These structural shifts create uncertainty that contributes to psychological stress, even for currently employed workers.
The True Cost of Ignoring Workplace Mental Health
When mental health issues go unaddressed, the financial impact is substantial.
According to the same ACTU survey of 26,000 respondents, 61% reported experiencing poor mental health because their employer had failed to manage psychosocial risk in the workplace.
Despite this high prevalence, 91% did not make workers compensation claims regarding their mental health, indicating significant underreporting of the problem.
For claims that do proceed, psychological injuries typically involve:
- Longer recovery periods than physical injuries (more than 5 times time lost compared to other claims)
- Higher costs (at least 4 times more expensive than physical injury claims)
- More complex return to work arrangements
- Greater productivity losses during recovery
The Productivity Commission has concluded that psychological health concerns are generally treated as secondary to physical health concerns in Australian workplaces. This disparity in treatment not only affects individual workers but creates significant business risks through increased absenteeism, presenteeism, turnover, and compensation costs.
Legal Obligations and Regulatory Changes
Under Australia’s Work Health and Safety Act 2011, employers have the same obligation to protect workers’ psychological health as they do physical health.
However, many workplaces don’t prioritise psychological safety equally. Unlike physical hazards, which are governed by specific standards, mental health hazards have historically lacked clear regulatory frameworks.
The good news, however, is that there are financial consequences to lack of compliance. Recently, there’s been a shift from education to regulation—including fines of over $10 million for non-compliant corporations.
How to Create a Mentally Healthy Workplace
Here are 5 research-backed recommendations to implement at your workplace:
- Provide managers with evidence-based mental health training: Research shows that managers have the greatest impact on employees’ mental health than GPs or therapists. Equipping them with the right skills ensures workplace grievances can be tackled in a timely manner.
- Build mentally healthy workplaces through organisational-level strategies: This simply means establishing role clarity in the workplace. Facilitate worker autonomy by ensuring clear job descriptions and making sure they have the tools and time to do their work.
- Take immediate preventative action on workplace bullying and harassment: As there has been a rise in workers comp claims in these areas, addressing these swiftly prevents such issues from escalating into a claim.
- Implement evidence-based protective factors: Refrain from simply copying what other organisations are doing. Always use evidence to guide policy and programs.
- Account for a steady post-pandemic workplace transition: Embrace hybrid work. The younger generations entering the workforce today are already facing significant mental health challenges.
The Business Case for Mental Health Leadership
Forward-thinking organisations are discovering that investing in workplace mental health delivers measurable returns through:
- Reduced absenteeism and presenteeism
- Lower workers compensation premiums
- Higher employee retention and engagement
- Enhanced reputation as an employer of choice
- Improved productivity and innovation
Most importantly, addressing workplace mental health proactively helps avoid the significant costs associated with psychological injury claims, which continue to rise year over year.
Taking Action Now
The workplace mental health landscape is evolving rapidly. Employers who fail to adapt will face increasing financial, operational, and potentially legal challenges.
The question is no longer about whether your organisation can afford to address workplace mental health—it’s whether you can afford not to.
By creating systems that prevent psychological injury, intervene early when issues arise, and support effective recovery, you’re taking one more step towards securing your organisation’s future.
Want to find out more? Contact us and let our mental health experts walk you through feasible strategies for improving workplace wellbeing today!
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Eisabess Chee is a seasoned writer with over 8 years of diverse experience in education, journalism and marketing. At AusRehab, she oversees content creation through research, writing, editing, and the crafting of resources that tackle workers compensation and workplace injury. Eisabess also curates the AusRehab newsletter, ensuring it’s packed with valuable and well-researched insights.
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