The Cost Of Mental Health In The Workplace
Poor mental health costs businesses—learn the financial and human impacts.
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The Rising Costs of Psychological Injury in the Workplace
Psychological injuries in the workplace are a significant issue that can lead to severe consequences for both employees and employers. These injuries, which include conditions like anxiety, depression, and stress-related disorders, stem from various workplace factors such as bullying, harassment, excessive workload, and poor job design.
The costs to individuals and business are only projected to increase over the next decade, so businesses must act proactively to ensure the safety of their staff against a variety of these psychosocial hazards.
Over the last decade workers compensation claims for psychological injuries have risen by 43%, with the costs of these claims having significant long-term impacts on both businesses and individuals.
Mental health conditions in the workplace are often stigmatised, which can make it difficult for individuals to seek help and get the treatment they need at the right time, delays in accessing support often mean longer recovery time due to the severity of the symptoms. This is especially true for certain industries, for example mental health in construction suffers from higher stigma at much higher rates.
Mental health conditions are often more complex and may take longer to diagnose and treat than physical health conditions. It can also be difficult to disentangle mental health issues caused by work or the working environment with mental health concerns more broadly.
The Cost to Businesses
The financial impact of psychological injuries on businesses is substantial. Employers face direct costs such as workers’ compensation claims, legal fees, and increased insurance premiums. Indirect costs include decreased productivity, higher absenteeism, and turnover rates.
Financial modelling shows that mental health related claims could double by 2030, and under the high growth scenario they could nearly triple. Given the likely impacts of COVID-related disruptions, job instability and working-from-home it is possible growth rates may increase further.
Mental Health Compensation Projections, CEDA 2022
Median compensation costs per claim for mental health conditions grew from $14,300 in 2000-01 to $45,900 in 2018-19. If recent trends continue, median costs per claim could triple in real terms by 2030.
Cost of claims
- According to Safe Work Australia, the average cost of a workers compensation claim is $45,900 for mental health-related incidents, which is 5 times the average cost of physical injury claims.
- The overall economic burden on Australian businesses is estimated to be billions of dollars annually. In New South Wales specifically, the cost of psychologically unsafe workplaces is approximately $2.8 billion. This estimate only accounts for workers compensation claims, absenteeism, and presenteeism.
These costs are also excarcebated in industries with a higher prevalence of mental health issues, such as the construction industry. Find out more about mental health statistics in construction.
Time off work
- According to Safe Work Australia, psychological injuries account for around 6% of workers’ compensation claims, yet they result in significantly longer time off work compared to physical injuries.
- ABS reported that the injuries or illnesses that had the highest average number of days off were Stress or other mental health conditions – 44 days off.
Prevalence
- According to the ABS work related injuries report psychological injuries have been increasing, with a 36.9% increase since 2017-18 of all serious workers compensation claims.
- The ABS 2018 report highlighted that 5.6% of workers who experienced a work-related injury or illness reported a mental health condition, and in 2021/22 data that figure rose to 6.8%
- Safe Work Australia’s reported in 2023/24 in terms of types of mental health conditions, anxiety/stress disorders are the most common at 45.8%.
Emerging Trends
- Safe Work Australia data shows that in 2022/ 2023 workplace harassment or bullying was the leading cause (27.5%), followed by work pressure (25.2%) and workplace violence (16.4%).
- Health care and social assistance has the highest number of claims (25%) and reports lower employee satisfaction in several areas.
- Public Administration and Safety and Education and Training have the greatest increases in claims since 2017-18.
- Health Care, Manufacturing, and Wholesale/Retail Trade have the highest prevalence of workplace bullying claims.
Find out more about bullying as a psychosocial hazard in the workplace.
Impact on workers
- Time off work with a psychological injury is over three times that of a physical injury.
- Workers with claims for mental health conditions experienced poorer return to work outcomes and were more likely to experience stigma from colleagues and their employers.
- The return to work rate for people with mental health condition claims was 79.1% compared to 91.6% for all injuries. 44.5% of those returning to work required additional time off.
Summary
Psychological injuries in the workplace, are a growing concern with significant impacts on both employees and employers. Emerging trends show an increase in workplace harassment, work pressure, and workplace violence over the next years.
Proactive steps like undertaking psychosocial risk assessments, as well as implementing stronger steps to identify psychosocial hazards are key to mitigating risks of poor outcomes. There is an imperative for businesses to act now to prevent harm to workers and to manage the economic costs of psychological injury.
Combining EAP & Psychosocial Hazard Management
The impact of psychosocial hazards can be significant and can lead to a range of negative outcomes, such as decreased job satisfaction, increased absenteeism and turnover, and reduced productivity.
It is required under the legislation for employers to identify, assess control and review these hazards. Foremind allows you to do this in the one place so that you can easily report on what you are doing as required.
Learn more about Psychosocial Hazards Compliance
Answers to the frequently asked questions.
Our last EAP was barely touched. Why would this be different?+
Most EAPs go unused because of how they're accessed, not because staff don't need them. Phoning a stranger, explaining yourself, then waiting weeks is enough to stop most people before they start. Foremind removes all three steps: staff see real counsellor profiles, pick someone themselves, and book the same day.
If you already have a provider, the question worth asking is what your current utilisation is. Most traditional EAPs sit in low single digits, which means you're paying for cover your people aren't reaching. If yours is being used, staff can get seen quickly, and it covers your psychosocial obligations, there's no reason to move. If not, it's worth knowing what you're getting for the spend.
Do you offer 24/7 support?+
Yes. A 24/7 after-hours crisis line means staff can reach someone immediately at any hour, including nights and weekends.
Counselling appointments are also available outside standard business hours, so shift-based and on-call teams aren't limited to a nine-to-five window. Those are two different things, and it's worth checking any provider offers both rather than just the crisis line.
Are your EAP counsellors based in Australia?+
Yes. Every practitioner on the platform holds current membership with an Australian professional body and practises under Australian standards, codes of ethics and disciplinary frameworks. There are no offshore call centres.
Practitioners hold membership with the Australian Counselling Association, the Psychotherapy and Counselling Federation of Australia, or the Australian Association of Social Workers, along with a current Working with Children or Vulnerable People Check.
How much does an EAP cost?+
Pricing is usually per employee per month, based on total headcount rather than how many people use the service. Costs vary widely depending on whether sessions are bundled in and whether compliance tooling is included.
A more useful comparison is cost per employee who actually uses it. An EAP with 2% utilisation can work out several times more expensive per person helped than one that gets used. Foremind offers pay-as-you-go, inclusive session plans and compliance-inclusive plans, with discounted pricing for not-for-profits and charities.
For full breakdown of our plans, see our EAP pricing page or request a quote for a tailored proposal.
What information does an employer receive about EAP usage?+
Nothing that could identify anyone. All counselling is completely confidential and all reporting is anonymous - you'll never see who booked, when, or what was discussed.
What you do see is the aggregated picture: how many people are using it, what psychosocial risks are prevalent in the business, and which teams are under pressure. Enough to know the investment is working and where to act, never enough to identify a person. Reporting thresholds mean small teams can't be reverse-engineered from the data.
Does having an EAP meet an employer's psychosocial duty of care?+
No. An EAP is a control measure, and a valuable one, but it only addresses harm after it has occurred. It doesn't identify hazards, assess risk, or evidence that controls are working.
Australian WHS law requires you to identify psychosocial hazards, assess the risk, control it so far as is reasonably practicable, and review whether those controls are working — with documented evidence at each step. Offering counselling on its own leaves three of those four steps undocumented.
Foremind covers both in one platform. See how the compliance side works in our product tour.