Excessive sick leave. No longer performing in the job. Behaviour has changed for the worse. How do you manage an employee when the cause of their underperformance is unclear? Tread carefully.

Stress, anxiety and depression are invisible tripwires of risk for employers. Your actions, whether acting hastily or turning a blind eye, can potentially result in claims for workers compensation, discrimination, and even bullying and harassment.

The cost of employees struggling with a mental illness in Australia is growing. Businesses face a loss of $4.7 billion due to absenteeism, $6.1 billion to presenteeism (where employees are present at work but are less productive due to illness), and $146 million in compensation claims relating to mental illness. That’s nearly $11 billion lost every year.

We know one in five Australian employees report they’ve taken time off work due to feeling mentally unwell in the past 12 months. It’s sometimes hard to determine whether an employee is taking a day off because they’re suffering from a physical illness, or are managing a diagnosed mental illness.

It’s common for employees to keep these struggles to themselves. But when managing their leave requirements, it’s important you have all the facts.

How to approach the situation

Managing employees who are experiencing stress, anxiety or some form of mental health condition has become a shared challenge for employers, HR and people managers.

Trying to work out what causes mental ill-health in employees is difficult and fraught with risk. Employers often feel paralysed by indecision when faced with an employee whose behaviour has changed and become a cause of concern. It is an invisible challenge.

A sensitive situation can rapidly escalate – whether an employer approaches the employee with suspicion, turns a blind eye, makes assumptions on their health or acts hastily.

Claims against the business can occur relating to:

  • workers compensation
  • bullying and harassment
  • discrimination
  • unfair dismissal.


The potential sum of damage? A loss of employees, diminishing productivity and morale, higher turn-over of staff, increased sick leave and reputational fallout in the community.

Starting a conversation

Think someone on your team might be in trouble? Take some time to consider the person’s state of mind before you open up a conversation, says Joe Murphy, Managing Director – National Workplace at Australian Business Lawyers & Advisors.

Murphy suggests starting “with a casual query about how they’re feeling, or if there’s been a situation at work. You can use that as the springboard to ask whether they’d be interested in the company’s employee assistance program”.

“And if you feel the situation warrants it, broach the topic with their next of kin as another avenue of support,” he says. “Be careful not to disclose personal information about the person in question during your conversations.”

Avoid the risk of overreaching

It pays to tread carefully. Get it wrong and you run the risk of employees lodging a claim with the Fair Work Commission, or their State or Territory Tribunal to seek compensation.

“Legal costs alone can be in the hundreds of thousands, but then you’re also looking at the actual compensation as well as the penalty you may be ordered to pay ($63,000 for businesses or $12,600 for individuals),” he says. “And what price do you put on your business’s reputation?”

Your essential workplace update

Our expert presenters from multi-award winning Australian Business Lawyers & Advisors will provide practical advice on preventative measures, performance management, and managing injured employees at our current Workplace Update Seminar series. There are still a number of seminars happening across the state. Register for an event near you:

“Trying to work out what causes mental ill-health in employees is difficult and fraught with risk.”