Most of the damage poor workplace mental health does to Australian employers will never appear as a workers’ compensation claim, new research from claims manager EML suggests.
Just 29% of workers said they would be likely to lodge a workers’ compensation claim if work seriously harmed their mental health, according to EML’s Mental Health Insights Report 2026. The report surveyed 4,065 workers and 831 managers and leaders, alongside Monash University analysis of four national datasets. EML says it is the first survey to put the same questions to workers and to their managers.
The costs show up elsewhere. Two in five workers took at least one day off for their mental health in the past year, but only 25% told their employer why. Some 41% at least sometimes worked while struggling because they felt they could not take time off. A third (34%) have left a job because of its impact on their mental health, and 46% would accept a pay cut for a job that was better for it.
“The problem now is that it is not translating into meaningful employer action. And while the consequences are genuinely toxic, they are also quite well disguised,” said EML’s Daniel Walton. He said the hidden cost of psychosocial risk is surfacing in claims, job retention, on-the-job productivity and leave taken.
Managers are under strain themselves. Some 22% of managers report losing sleep over work often or very often, against 14% of employees without management duties. Only 56% of managers and leaders agree their organisation’s workloads are sustainable over the long term. Yet 58% expect their organisation’s investment in mental health to stay the same next year, and only one in five expect it to rise.
The claims that are lodged are already significant. Serious workers’ compensation claims for mental health conditions rose 169% over the past decade, according to Safe Work Australia. In NSW, psychological claims account for 12% of workers’ compensation claims but 38% of total cost. The state tightened eligibility for those claims from July 1.
EML recommends employers redesign work where high demands meet low control, and equip managers to intervene early. It cites a Fire and Rescue NSW trial in which four hours of mental health training for managers was associated with 6.45 fewer hours of work-related sickness absence per employee over six months, returning about $10 for every dollar spent. EML also recommends combining claims data with information on exposure, absence, turnover, disclosure and recovery to see where risk concentrates.
For brokers with commercial clients, that last recommendation matters most. With only 29% of workers inclined to claim, a clean psychological claims record does not mean low psychosocial risk. In NSW, inspectors can act on unmanaged psychosocial hazards whether or not anyone has been injured, and the resulting WHS fines cannot be insured. That brings management liability into the same conversation as workers’ compensation.
