Psychological health and safety cost benefits

Establishing baseline costs and learning about legal trends and innovative leadership perspectives can help build your business case for addressing psychological health and safety in the workplace.

Measuring the costs of a psychologically unsafe workplace

70% of Canadian employees are concerned about the psychological health and safety of their workplace, and 14%  don’t think their workplace is healthy or safe at all (Mental Health Commission of Canada, 2022).

Employees who experience high demand, low control, high effort and low reward are more likely to suffer adverse consequences of a psychologically unsafe workplace. The costs of these consequences can be staggering, both for individuals and the organization:

Potential health costs

3× Heart problems

3× Back pain

5× Certain types of cancer

2-3× Injuries of all types

2-3× Infections

2-3× Conflicts

2-3× Mental health problems

2-3× Substance use problems

Potential performance costs

• Reduced adaptability
• Reduced ability to cope with change
• Impaired learning
• Increased likelihood of a disability claim (Wang & Karpinski, 2022)
• Increased helplessness
• Increased passivity OR aggression/conflict

Adapted with the permission of Dr. Martin Shain, principal of the Neighbour at Work Centre.

Establish baseline costs

A psychologically unsafe workplace is not only problematic for employees: it can also reduce an organization's performance. The Mental Health Commission of Canada found that in any given week, 500,000 Canadians miss work due to a psychological health issue (Wang & Karpinski, 2022). 

Lost productivity accounts for an estimated $16.6 billion to Canadian employers (Mercer, 2018), about one-third of the annual $51 billion cost of mental illness in Canada (Dewa et al., 2011). In a global knowledge-based economy, employers can't let an unhealthy workplace reduce an employee's potential to contribute their energy and ideas (Lowe, 2014).

• Assess your existing expenses in terms of costs associated with not addressing psychological health and safety in the workplace. These expenses could include costs and time related to:
  • Job burnout
  • Absenteeism
  • Presenteeism
  • Turnover
  • Short- and long-term disability
  • Benefit utilization rates
  • Workers' compensation claims
  • Return-to-work and accommodation
  • Employee and family assistance plan (EFAP) use
  • Workplace grievances
  • Workplace conflict
  • Health and safety infractions
  • Stigma and discrimination
  • Human rights violations (including harassment, violence, bullying)
  • Adverse events
• Measure over regular time periods and use this information to identify trends and areas for improvement.

Consider legal trends

In his Getting Ahead of the Perfect Legal Storm | PDF report, Dr. Martin Shain suggests that providing a psychologically safe workplace is becoming a legal imperative. He highlights seven major trends in law that all point to the need for employers to provide a psychologically safe workplace. These have been provided below with some adaptations:

1. Human rights – Courts and tribunals across the country are increasingly adding scope and definition to an employer's obligation to reasonably accommodate mental illness in the workplace. Human rights agencies in some jurisdictions have gained increased powers to issue public interest remedies that may limit employers' rights.
2. Law of torts – In some provinces it has been held that a reasonably prudent manager should be expected to understand the effect their behaviour has on those who report to them. Failure to do so can attract liability for infliction of mental suffering. Standards vary across the country.
3. Workers' compensation – In one province it has been held unconstitutional to administer and adjudicate claims for mental stress differently from those for physical injury. In another province, death benefits were awarded to the family of a heart attack victim resulting from mental stress to which managerial negligence contributed. In some provinces, damages can be awarded for chronic mental stress or bullying. Go to your province or territory’s board website to find your coverage.
4. Occupational health and safety (OHS) – There is increasing recognition in at least two provinces that mental health and psychological safety fall within the scope of responsibility to provide a safe system of work under OHS legislation. Assessing and addressing psychological risk is becoming part of the overall hazard identification and risk management process. Some provinces have added violence and harassment explicitly to their Acts. The Canada Occupational Health and Safety Regulations require employers to ensure that employees are protected against workplace violence, both physical and/or psychological in nature (Wang & Karpinski, 2016).
5. The employment contract – No longer is the employment contract simply an exchange of wages for services. It has now been deemed by some courts to include implied terms for psychological comfort, moving towards establishing the duty to provide a psychologically safe workplace within the context of the employment relationship.
6. Employment standards legislation – Labour codes across the country concerning psychological harassment are contributing toward making protection from harassing behaviour part of the normal employment relationship.
7. Labour law – Even when the wording is not implicitly included, collective agreements have been deemed in some jurisdictions to contain the terms of relevant occupational health and safety statutes, which in turn have been held to include terms for the protection of psychological safety.

Review statistics

Many leaders will also request evidence for why investing in or addressing psychological health and safety is a prudent strategy for their organizations. See Psychological Health and Safety Statistics and Evidence for psychological health and safety to help make your case.

Additional resources

The following provide additional information and evidence to support the business case from a leadership perspective.

• The Shain Reports on Psychological Safety in the Workplace – A Summary | PDF. Information courtesy of the Mental Health Commission of Canada.
• The Wellness Dividend: How Employers Can Improve Employee Health & Productivity | PDF. Report by Graham Lowe, Ph.D., provides employers and benefits consultants with a state-of-the-art, evidence-based overview of why investing in employee wellness makes sense. Also provided are practical insights. Information courtesy of the Graham Lowe Group.
• Psychological Health and Safety Business Case Template. The purpose of this business case template is to assist organisations to obtain internal support to implement a psychological health and safety approach to workplace mental health. This document provides a comprehensive case for this approach, including defining the problem, the impact mental health has on employees, organisations and the wider community, expected benefits and outlines how psychological health and safety can be implemented.