Mental health workers' comp: What employers need to know

Across Australia, mental health-related workers’ compensation claims are skyrocketing in numbers. Krislyn Sinclair, a solicitor specialising in workers’ compensation, explains how employers can prevent mental health issues from arising, plus how to manage claims when they arise.

Australian workplaces are witnessing an alarming trend: a 30 per cent surge in mental health-related workers’ compensation claims over the four years to mid-2023, significantly outpacing the 11 per cent rise in physical injury claims.

Mental health-related and psychological injury claims – relating to psychosocial risks like bullying, harassment, trauma or isolation – are the fastest-growing category of workers’ compensation claims, leading to workers taking up to four times longer off work than for other claims.

This surge, coupled with increased regulatory scrutiny and potential financial implications, necessitates a proactive approach from employers.

So, what do employers need to know to reduce the incidence of these claims in the workplace, and support those that arise?

The mental health-related workers’ compensation claims landscape

Workplace mental ill-health costs Australian businesses up to $39 billion annually in lost productivity and participation. Mental health conditions accounted for 9.2 per cent of serious workers’ compensation claims in 2021-22, often requiring extended periods of leave compared to physical injuries.

Off the back of these escalating claims, workplace health and safety regulators are coming down more strongly. For example, SafeWork NSW is increasing compliance checks and may prosecute businesses that fail to protect employees’ mental well-being.

Employers have a legal obligation to ensure the health and safety of their workers, encompassing both physical and mental well-being.

How to make your workplace mentally healthy

It is now a formal responsibility of businesses to cultivate a mentally healthy workplace. There are several ways employers can prevent psychosocial risks from arising.

Leadership commitment: Demonstrate a genuine commitment to mental health from the top down. That includes funding and championing mental health initiatives in the workplace such as an Employee Assistance Program (EAP), wellbeing initiatives or mental health training. It also includes walking the talk and leading by example through sharing their own experiences and modelling healthy behaviour.

Open communication: Foster a culture where employees feel comfortable discussing mental health concerns without fear of stigma. Provide regular opportunities for open dialogue and feedback, such as through holding one-on-ones with all staff periodically, surveying employees on their wellbeing and engagement, or carving out time in other (private) meetings to discuss mental health concerns.

Education and awareness: Conduct workshops and training sessions to raise awareness about mental health issues and reduce stigma. This can be outsourced to experts such as the Black Dog Institute to ensure it is handled delicately and safely.

Healthy work-life balance: Encourage employees to take breaks, utilise leave entitlements, and disconnect from work after hours.

Stress management programs: Offer resources and training on stress management techniques, mindfulness, and resilience. SafeWork offers a wide range of resources for employers and employees on managing workplace stress.

Zero tolerance for bullying and harassment: Implement strict policies against bullying and harassment, and ensure employees know how to report any incidents.

In the event that an issue arises, intervening early to address the psychosocial risks is crucial. Options for employers include:

Employee Assistance Programs (EAPs): Offer confidential EAPs that provide professional counselling and support services for employees and their families. Many EAP programs providers now tailor to the needs of small and medium sized businesses and are cost-effective and flexible.

Regular check-Ins: Encourage managers to have regular one-on-one conversations with employees to discuss their well-being and offer support if needed.

Return-to-work programs: Develop comprehensive return-to-work programs that cater to employees’ individual needs after a mental health-related absence. In NSW, your return-to-work programs must be compliant with the State Insurance Regulatory Authority’s (SIRA) requirements. Check out SafeWork for more information on your obligations in this regard.

What to do when a claim is made

When a claim is made, employers have several options to streamline the process and ensure the best outcome for the employee and company.

Know your obligations: Familiarise yourself with workers’ compensation legislation and the specific requirements for mental health claims. For those in NSW, SIRA provides a useful guide to the relevant legislation.

Prompt response: Address mental health claims promptly and with empathy. Communicate clearly with the employee and provide necessary support throughout the process.

Collaboration: Work closely with your insurer and healthcare providers to ensure a smooth and efficient claims process.

Focus on recovery: Prioritise the employee’s recovery and return to work by offering appropriate support and accommodations.

Proactive risk management

As part of the end-to-end process, from prevention, through to claims, mitigating risks will be a key focus. Here’s how employers can integrate managing psychosocial risks into their risk management processes:

Regular risk assessments: Conduct thorough workplace risk assessments to identify and address potential hazards to mental health.

Implement control measures: Develop and implement strategies to mitigate identified risks, such as adjusting workloads, improving communication, or providing additional training and resources.

Monitor and review: Continuously monitor and review the effectiveness of your mental health initiatives and make adjustments as needed.

By implementing these proactive and adaptive strategies, employers can create a supportive and mentally healthy workplace, reducing the risk of mental health claims, improving employee well-being, and enhancing overall productivity. Remember, investing in your employees’ mental health is not only a legal and ethical obligation but also a sound business decision.