Australia: How to manage workplace stress and minimise the risk of mental illness claims

Last Updated: 26 September 2016
Article by Lauren Drummond
Most Read Contributor in Australia, November 2018

Research by Safe Work Australia suggests that mental illness claims caused by stress account for more than 95% of workers' compensation mental injury claims. These types of claims are often more expensive than other claims because of the lengthy periods of absence from work. Here, we examine organisational factors that may contribute to work-related stress for your employees and the way your business can tackle some of these issues.

Signs of stress

Signs an employee is experiencing stress include:

  • reduced productivity and efficiency;
  • poor performance;
  • high levels of absenteeism;
  • stress-related illness, such as anxiety;
  • increased conflict or a poor relationship with colleagues; and
  • poor attitude or behaviour.

Legal obligations to reduce work-related stress

You have a duty to maintain a working environment that is safe and without risks to health (including mental health), as far as reasonably practicable. This does not mean you are obliged to eliminate stress from work. If, however, you are aware of circumstances where unreasonable behaviour is causing a degree of stress, which creates a health and safety risk, you will be obliged to take practical steps to control the risk.

In most Australian jurisdictions, workers' compensation for mental or psychological injury is excluded if the injury arises from or is caused by reasonable management action (e.g. performance management and disciplinary procedures), which are carried out in a reasonable manner. There are also a number of other steps you can and should take to minimise factors that contribute to workplace stress and reduce workers' compensation claims.

Six factors that contribute to workplace stress

Consider whether the following factors may be an issue in your workplace, then refer to the checklist on page 5 for how to address them.

  1. Inadequate job design

Where there appears to be a level of job dissatisfaction or high staff turnover in a particular team, it might indicate work-related stress caused by poor job design.

There are a number of elements to job design, including:

  • performance objectives;
  • areas of responsibility;
  • role accountabilities; and
  • key duties.

If these are not clearly set out, it may result in a lack of clarity about the role and lead to poor performance and stress. Equally important is how tasks and duties are performed, including:

  • the level of autonomy/self-direction;
  • the ability to have input into decision- making; and
  • the amount of supervision required for each task.

Tasks should be varied across each of these elements and provide for discretion in determining how they can be performed.

Where an employee is required to perform meaningless tasks without any discretion, it could lead to higher levels of stress. One mode of tackling inadequate job design is to conduct surveys about employee engagement and job satisfaction, and obtain feedback in exit interviews.

  1. Poor organisational structure

A business that is structured with low visibility across different teams can cause employees to experience unmanageable workloads and tighter deadlines. A poor organisational structure might also result in employees having less access to supervisors and other resources required to perform their duties.

  1. Poor support from supervisors and inadequate resources

Poor support from supervisors and colleagues can lead to longer work hours and subject employees to unreasonable deadlines. Poor support might develop from a lack of practical guidance or a failure by supervisors to make themselves available to discuss workplace issues. Ensure supervisors are trained to provide appropriate feedback and performance management.

A lack of adequate resources (e.g. technology and refresher training) can also contribute to employees becoming stressed and unhappy.

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  • Workplace conflict

Friction between colleagues can be a key contributor to work-related stress. Conflict between colleagues may range from tensions over assigned work or promotion opportunities to unreasonable bullying behaviour.

Other forms of harmful behaviour, such as offensive conduct, inappropriate language or discrimination may also have serious consequences for employees.

Also be aware of more subtle negative behaviour, including:

  • isolating or excluding employees;
  • deliberately overloading a person with work (or not providing enough meaningful work); and
  • setting unreasonable deadlines that are difficult to achieve.

It is important to take proactive steps to resolve conflict early. Harmful behaviour and prolonged conflict can create a risk to the health and safety of employees if left unaddressed.

Unresolved conflict may be caused by:

  • a toxic work culture;
  • a failure by supervisors or management to address unacceptable behaviour; or
  • employees being unaware of how to raise issues with supervisors or managers.

Employers should be mindful that unresolved conflict and bullying behaviour can cause serious mental harm to employees and may result in a compensation claim against your business.

  1. Unreasonable performance management

Performance issues are often only raised once it is too late for an employee to address them. It is important that performance management is more than a disciplinary tool, or simply a formal written and documented process.

Performance management processes that are punitive or provide feedback to employees that is highly critical may cause employees to experience increased levels of stress. This can also result where performance is measured solely on individual or output-based targets.

While there are circumstances where a formal performance management process may need to be undertaken, you should ensure that generally, performance issues are addressed early and form part of an ongoing and constructive process.

  1. Organisational restructure and job insecurity

Stress can be caused by employees feeling insecure or uncertain about their future prospects in the workplace. This could include circumstances where there is:

  • an organisational restructure, which may lead to the redundancy of some positions;
  • poorly controlled communication in relation to the restructure/change; and
  • lack of participation by employees in the process for deciding/implementing the change.

This might perpetuate feelings of uncertainty and can commonly lead to stress-related illness. Accordingly, it is important to control the flow of information and ensure a transparent process.

This publication does not deal with every important topic or change in law and is not intended to be relied upon as a substitute for legal or other advice that may be relevant to the reader's specific circumstances. If you have found this publication of interest and would like to know more or wish to obtain legal advice relevant to your circumstances please contact one of the named individuals listed.

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Lauren Drummond
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