Australian small businesses face sharp rise in mental health absences

New research shows that Australian small businesses are experiencing the highest rate of increase in mental health-related absences globally.

The study, conducted by Peninsula Australia, surveyed 30,500 small and medium-sized business owners across Australia, New Zealand, the UK, Ireland, and Canada. Findings revealed 33% of Australian employers reported a rise in mental health-related sick leave over the past year.

This increase comes amid growing awareness of the importance of mental health support in the workplace. More than half of Australian employers (51%) observed an uptick in staff experiencing mental health challenges on the job.

Support measures

Despite increasing recognition, the implementation of formal support structures remains limited. According to the survey, 72% of Australian employers do not offer dedicated mental health days and have no plans to introduce such leave in the coming year. One in six provide mental health leave outside of traditional annual entitlements, while 39% have an Employee Assistance Program (EAP) in place for staff.

Kayleigh Frost, Associate Director of Operations at Wisdom Wellbeing ANZ, the provider of Peninsula Australia's Employee Assistance Program, commented on the situation, saying frontline data aligns with these survey findings.

"There is a clear shift in awareness around mental health across our workforce. The conversations are becoming more open, and the demand for support is rising. In the past year, we have seen a 222% increase in calls to our EAP and a 128% increase in referrals for structured counselling. Mental health concerns now account for nearly a third of all calls. The volume and urgency we are hearing on the helpline paint a very real picture of a rising need," said Frost.

According to Frost, the majority of these calls are made by women (63.6%), especially those aged 30 to 39. Healthcare and medical professionals account for the largest portion of EAP users, followed by employees from construction, professional services, and manufacturing sectors - industries that play significant roles in the Australian economy.

"We often talk about resilience and wellbeing in the abstract, but the numbers show us where the pressure points are. With 76% of employers not confident their staff would feel safe speaking up about mental health, there is still a culture of silence we need to break."

Labour market trends

The research follows the latest Australian Bureau of Statistics labour force data indicating a 0.9% reduction in hours worked in June, marking the sharpest monthly decline in the last two years. Over the past year, employment rose by 2.1%, while unemployment increased slightly to 4.2%.

Frost highlighted the potential long-term impact of these mental health pressures on productivity and business stability.

"On paper, the labour market looks stable, but behind the scenes, many workers are stretched or quietly burning out," added Frost.

Current practices

Despite these challenges, 68% of Australian employers currently offer some form of mental health support. When compared globally, Australian businesses demonstrate stronger intentions to invest in manager and employee training, offer EAP access, mental health days, and flexible work arrangements, though practical implementation remains inconsistent.

Frost pointed to ongoing progress but warned that gaps remain between available resources and employee needs.

"We are seeing more businesses engaging with mental health as a workplace issues, and many are starting to take steps to support their teams. At the same time, there is still a gap between what is currently offered and what employees may need. The increase in calls to our support line shows that more people are reaching out, and it reinforces the need for sustainable support. Support needs to be accessible and meaningful, not a tick-the-box exercise. Poor mental health is estimated to cost Australian employers approximately AUD $11.5 billion a year. We cannot afford for mental health to be the thing that is talked about in policy but missed in practice. The opportunity lies in translating this awareness into consistent and tangible support for employees."