‘Psychologically Unsafe’ Workplaces Cost Companies Millions


It used to be that when workers got injured on the job, they were suffering from physical injuries. But our understanding of workplace injury and illness has changed to include mental conditions, such as post-traumatic stress disorder or depression. Similarly, these ailments are typically caused not by hazardous chemicals, machines and other physical dangers contained in the workplace but by an unhealthy psychological climate where hazards include workplace violence, bullying and mental stress. This expanded view of workplace hazards and injuries has severe financial consequences for companies. Workers are filing workers’ comp claims—and in some cases, lawsuits—over these mental injuries. In fact, a recent report by the Mental Health Commission of Canada (MHCC) says that financial awards for damages caused by mental injury at work have increased over the past five years by as much as 700%!

Here’s a look at this report’s findings and how so-called “psychologically unsafe” workplaces hurt a company’s bottom line.

The MHCC Report

Tracking the Perfect Legal Storm was prepared for the MHCC by Dr. Martin Shain, an academic lawyer and expert in workplace mental health issues. In the report, he concludes that employers have a legal duty to maintain not only a physically but a psychologically safe workplace. According to Shain, the pressures of the modern workplace can lead to common mental health conditions, such as depression, anxiety and burnout, which can sometimes be characterized as mental injury. Courts and tribunals are scrutinizing behaviour that may cause mental injury to workers. In more and more cases, legal actions are being taken in seven key areas of law, including OHS and human rights law. These factors are converging to form what Shain calls a “perfect legal storm.”

“Judges, arbitrators and commissioners are becoming increasingly insistent upon more civil and respectful behaviour in the workplace and avoidance of conduct that could lead to mental injury,” says Shain. As a result, Shain says that Canadian courts and tribunals are:

  • Increasingly intolerant of workplace environments that threaten psychological safety;
  • Ordering management to change workplace habits that threaten workers’ mental safety, health and well‐being; and
  • Imposing increasingly large financial punishments for transgressions.

Insider Says: For more information on mental stress claims under workers’ comp, see, “Update: Are Mental Stress Claims Covered by Workers’ Comp?

The Costs of Mental Stress

Overall, Shain estimates that between $2.97 billion and $11 billion could be saved annually in Canada if mental injuries caused by the actions of employers were prevented. He says that employers who set a strategic goal for managing and improving workplace mental health will benefit from significant and sustainable gains in:

  • Productivity;
  • Recruitment and retention;
  • Cost reductions due to lower disability and absentee rates;
  • Conflict reduction; and
  • Operational success.

Bottom line: It’s in your company’s best interests to be proactive in providing a psychologically safe workplace to avoid the losses associated with preventable mental injuries in workers.

Insider Source

Tracking the Perfect Legal Storm, Dr. Martin Shain, Mental Health Commission of Canada, May 2010