Building Resilient Workplaces: The Legal and Strategic Case for Investing in Mental Health

For employers in large companies, workplace wellbeing has become a significant focus – both as a legal responsibility and a strategic business priority. Poor mental health can expose companies to legal risks, including claims related to workplace stress, mental health discrimination, and breaches of occupational health and safety obligations. At the same time, addressing mental health proactively can unlock tangible business benefits such as increased productivity, reduced absenteeism, and improved retention.

However, mental health remains a taboo subject in many workplaces. Companies often prioritise physical health (promoting exercise, healthy eating, and adequate rest) while neglecting mental wellbeing. This oversight can have severe consequences for both employees and businesses. A report from the World Health Organization (WHO) estimates that poor mental health costs the global economy USD1 trillion annually in lost productivity.

Mental health issues (burnout, stress, anxiety, and depression) are increasingly prevalent in the workplace and significantly affect employees and organisations alike. The WHO data underscores the profound impact mental health issues have on global productivity, with more than half of long-term absences from work directly linked to stress and mental health disorders. At a recent conference in Mexico City, organised by the International Organisation of Employers (IOE) and FEMSA, representatives from over 20 international companies exchanged insights on work-related topics, and I had the privilege of speaking on wellbeing and mental health, which were prominently featured on every agenda.

Although mental health has made its way into corporate strategies, it is still too often relegated to HR departments, which alone cannot produce the comprehensive results needed. For employers, these issues present significant risks. Companies that fail to address mental health proactively can face claims for negligence, breaches of health and safety duties, and workplace discrimination under local laws.

Employers are increasingly taking steps to address mental health before it leads to larger legal and operational issues. Some of the approaches are outlined below.

Implementing comprehensive employee wellbeing programmes is not just a safeguard against absenteeism and turnover – it is a legal and financial necessity. Research by Deloitte shows that companies see an average return of EUR5.30 for every EUR1 invested in mental health initiatives.

Such initiatives are not only the right thing to do but also provide a solid defence for employers in the event of legal claims regarding workplace stress or mental health issues.

One of the most crucial factors in promoting mental health successfully is securing support from the top. While 70% of managers feel underprepared to handle mental health issues, leadership that takes these concerns seriously can have a profound impact. Employers should ensure that leadership not only understands the importance of mental health but is also equipped to foster an open and supportive environment.

An open dialogue around mental health can reduce the stigma that prevents employees from seeking help and can protect companies from legal exposure. Companies like Google have shown that encouraging conversations about mental health fosters a more engaged workforce. Studies show that businesses that promote open discussions around wellbeing experience a 62% increase in employee engagement. Employers must ensure that policies and procedures are in place to support an inclusive culture, thus reducing the risk of legal claims related to mental health discrimination or negligence.

To create a working environment where mental wellbeing is prioritised, employers can take several strategic steps.

During the Mexico City conference, I discussed the topic “Wellbeing and Mental Health at Work”. Many attendees agreed that mental health was a priority, but some still saw it as an issue for HR alone. For true impact, companies must view mental health as a broader strategic goal. As mentioned earlier, after implementing structured wellbeing programmes, companies saw a reduction in stress-related absenteeism. Investing in such initiatives is not a cost burden; it is a strategic investment with a high return.

Effective support from leadership is essential for a mentally healthy work environment. Managers must be trained to recognise early signs of stress and to respond effectively, which will lead to a sharp decrease in stress-related turnover as top management becomes directly engaged in mental health strategies.

Conducting regular wellbeing audits and identifying early signs of stress can help companies intervene before mental health issues escalate. These audits, combined with early intervention mechanisms such as Employee Assistance Programmes (EAPs) and peer support groups, help address concerns before they lead to legal issues or long-term absenteeism. This proactive approach also serves as evidence of the company’s commitment to its duty of care.

Several large corporations have successfully integrated mental health and wellbeing initiatives into their business strategies, reaping significant financial and operational benefits, as outlined below.

PwC’s comprehensive mental health strategy (flexible work arrangements and access to counselling services) resulted in a 30% reduction in stress-related absenteeism. The material benefits were clear: lower absenteeism, improved productivity, and better employee satisfaction.

At Unilever, leadership training focused on mental health led to a 53% reduction in stress-related turnover, demonstrating how investing in manager training can reduce the financial burden of turnover while building a healthier workforce.

Investing in mental health benefits employees and businesses alike. Companies that invest in mental wellbeing see a 29% increase in productivity and a 40% decrease in absenteeism, making it clear that investing in employee wellbeing is not a cost burden, but a strategic move that enhances organisational performance and resilience.

The future of work requires a new perspective on employee wellbeing and sustainability. Mental health must be a core element of business strategy. Companies that embrace this mindset will not only build the resilience of their workforce but also strengthen their competitive position in the marketplace.