As a small or medium-sized business owner in Australia, you’re no doubt aware of the increasing focus on mental health in the workplace.
We want to highlight that under the model workplace health and safety laws, employers must manage the risks of psychosocial hazards in the workplace. These hazards include poor support, remote work, high job demands, exposure to traumatic events, bullying, and more. They can lead to both physical and psychological harm – with the latter spanning anxiety, depression, post-traumatic stress disorder and sleep disorders. As well, such hazards could interact or combine to form new, changed or higher risks.
The Productivity Commission says mental-ill health is costing Australia billions of dollars. The Diversity Council Australia says mental illness is the top cause of long-term sickness absence in Australian workplaces.
And, recent data shows a significant rise in mental health-related claims in Australia, making it essential for SMEs to proactively address this issue.
A Surge in Mental Health Claims
Over the past decade, our nation has witnessed a 732% increase in mental health-related permanent disability claims among workers aged 30 to 40. That’s according to KPMG’s Australia’s Mental Health Check-Up report released last November.
For instance, in 2023, on average for each claim, a worker took 76 days off work. All up that year, more than 655,000 days of work were lost due to mental health claims.
This surge indicates that more employees in this age bracket are leaving the workforce permanently due to mental health challenges. As well, mental health conditions now account for nearly one-third of all permanent disability claims in the country.
Why Mental Health is a Business Issue
Mental health concerns extend beyond personal well-being; they directly impact business operations. Employees facing mental health issues often experience:
- Decreased productivity
- Higher absenteeism
- Diminished creativity, growth mindset and innovative thinking
- Possibility of more workplace conflicts and strained team dynamics
- Great risk of errors or safety incidents, and,
- In severe cases, may exit the workforce entirely.
Notably, men are 59% more likely than women to be permanently disabled due to mental health conditions.
For SMEs, unaddressed mental health issues can lead to substantial workers’ compensation claims. The financial implications are significant, with mental health-related claims rising by nearly 10% annually, compared to a 0.5% annual growth rate for physical disability claims.
The Role of Workers’
Compensation Insurance
Workers’ compensation insurance offers financial support to employees who suffer work-related injuries or illnesses, including mental health conditions. This support can cover medical expenses, rehabilitation costs, and income replacement for affected employees.
However, an uptick in mental health-related claims can result in higher insurance premiums for your business. Consider having comprehensive coverage that safeguards both your employees and your enterprise against unexpected claims.
Proactive Strategies for SMEs
To mitigate risks and promote a healthy work environment, consider implementing the following strategies:
- Foster a supportive workplace culture: Encourage open discussions about mental health and ensure employees feel comfortable seeking assistance.
- Implement early intervention measures: Offer resources such as stress management workshops and Employee Assistance Programs (EAPs) to address issues before they escalate
- Regularly update workplace policies: Ensure your policies reflect current best practices in mental health support and are communicated effectively to all staff
- Offer mental health training programs for managers and staff to recognise the signs of mental health issues in themselves and each other and provide appropriate support
- Create a healthy physical environment, where workspaces help boost wellbeing and there are areas for relaxation and social interaction, and
- Collaborate with us: Work closely with us to ensure your workers’ compensation policy includes coverage for psychological injuries.
Navigating Claims and Reducing Risk
When an employee files a mental health-related claim, aim to handle it with care and efficiency. Prompt reporting, thorough documentation, and continuous support for the affected employee are vital steps in your process.
We can assist with claims management strategies and ensure your business has the right insurance coverage to mitigate long-term costs. Consulting with legal professionals can also help you navigate complex regulations and ensure compliance.
The Black Dog Institute offers valuable support and information for both employers and employees. Also check out advice from the Fair Work Ombudsman, WorkSafe Victoria, and the NSW State Insurance Regulatory Authority.
We’re Here to Support You
We understand the challenges SMEs face regarding mental health in the workplace. We can help you navigate workers’ compensation insurance and get best-fit coverage for your risk profile and needs. Together, we can foster a supportive environment for your employees and protect your business from unforeseen claims.
And a P.S. to take care of your own mental health. Research by one of the big four banks has found that more than half of SME owners and senior managers say the economy has impacted their mental health in the past year.