Chapter 4. wAddressing mental health in New Zealand’s workplaces

This chapter reviews policies, programmes and activities of key stakeholders involved in promoting mental wellbeing within New Zealand’s workplaces and retaining workers who experience mental health problems. The analysis looks, in particular, at the common ways in which employers manage mental health risks and address concerns when they emerge; how public campaigns combat stigma, discrimination and misconceptions surrounding mental health; how New Zealand helps workers with mental health problems reintegrate into the labour market; and how sickness leave policies help or hinder them. Throughout this chapter, the analysis draws upon the OECD Council Recommendation on Integrated Mental Health, Skills and Work Policy of 2015 as the primary benchmark for best practices in this field.

Introduction

The links between mental health and work are multi-fold. With one in five workers at any moment experiencing mental health conditions in all OECD countries, workplaces have to deal with these problems and their consequences on a daily basis. In view of this, the pervasiveness of mental health stigma in the workplace is surprising. Many employers would not hire even highly qualified applicants if they knew they had a mental health condition. Not surprisingly, therefore, many employees with mental illness choose not to disclose because they fear discrimination and dismissal.

This confused situation is problematic for several reasons. First, unrecognised or unsupported mental health conditions are very costly for employers through longer sickness absences of these workers and higher productivity losses while at work. Secondly, longer and repeated periods of sick leave are often a steppingstone to labour market exit and permanent inactivity. This is especially problematic in view of the increasing evidence that employment is generally good for mental health, and can speed up recovery. But this is not necessarily true in every situation because poor-quality jobs, poor leadership, and psychosocial stress in the workplace can put mental health under strain and exacerbate underlying mental health problems (OECD, 2015[1]).

New Zealand has only limited data to measure these manifold associations and implications. A 2016 survey by Business New Zealand based on a relatively small sample of companies finds that businesses lost an estimated 6.6 million working days in 2016 due to sickness absence (an average of 4.4 days per worker), costing the economy around NZD 1.5 billion per year (BusinessNZ and Southern Cross Health Society, 2017[2]). The extent to which this loss is due to mental illness is unknown but the survey findings indicate rising levels of work-related stress and a high degree of presenteeism among workers (i.e. people underperforming at work because of health issues). Another survey of working-age adults, also in 2016, points to a reluctance to disclose mental distress, especially in work settings (Health Promotion Agency, 2018[3]).

These findings and the underlying dynamics call for strong efforts by employers to identify and prevent psychosocial risks at work and respond to mental health problems of their workers. These efforts need matching by the New Zealand government to support employers in their tasks and provide regulations, guidance and tools to help workers with mental illness keep their jobs. This chapter analyses how these issues are approached in New Zealand, what could be improved and what the country could learn from promising approaches in other OECD countries.

The main challenges for New Zealand’s workplace policies

The OECD Recommendation of the Council on Integrated Mental Health, Skills and Work Policy calls upon its member countries to: “seek to develop and implement policies for workplace mental health promotion and return-to-work in close dialogue and co-operation with the social partners,” detailing several key priorities for action that policy makers should consider (OECD, 2015[4]).

Table 4.1 gives a brief assessment of New Zealand’s performance in each of these policy areas, and suggested actions. In summary, the situation is as follows:

Table 4.1. New Zealand’s performance regarding the OECD Council Recommendations around improving workplace mental health promotion and return-to-work
	OECD Council Recommendation	New Zealand’s performance	Suggested actions
A	Promote and enforce psychosocial risk assessment and risk prevention in the workplace consistent with applicable privacy and non-discrimination laws, to ensure that all companies comply with their responsibilities.	Information on workplace stress and bullying is still limited and knowledge on what to do is underdeveloped Health and safety legislation is still seen as safety oriented; enforcement in terms of work-related health is poor WorkSafe (the lead health and safety regulator) lacks financial resources and sufficient psychosocial risk competence to support businesses in managing health and safety risks	Enforce legislation through obligations for employers (e.g. prevention plans) and corresponding support (e.g. guidance tools that describe risks) and sanction those who do not comply Train WorkSafe staff on psychosocial issues, strengthen its enforcement capacity (e.g. implement workplace measures) and increase its resources Review the effectiveness of legislation and WorkSafe capacity building
B	Develop a strategy for addressing stigma, discrimination and misconceptions faced by workers living with mental health conditions at their workplace, with a focus on leadership and improved competencies of managers and worker representatives to deal with mental health issues.	Toolkits for employers, such as Open Minds, developed by various mental health agencies Employer Advice Line (Monday to Friday telephone service) High workplace bullying prevalence due in part to high job insecurity and depressed wages Significant employer-led initiatives and networks	Evaluate the reach and impact of toolkits, also in small and medium-sized enterprises and disseminate available toolkits widely Improve focus on quality work and stress prevention in collective agreements Share good practices of employers and employer networks, involving especially smaller enterprises
C	Promote greater awareness of the potential labour productivity losses due to mental health conditions by developing guidelines for line managers, human resource professionals and worker representatives to stimulate a better response to workers’ mental health conditions.	Relatively short period of sick pay, also implying high presenteeism Employers often lack the skills and knowledge to address mental health problems of their workers Employee Assistance Programmes (EAP) available in larger companies, but covering less than one in three workers across the country System of occupational health is underdeveloped/focused on safety	Invest in good evidence base and collect key data in a systematic way Increase period of employer-paid sick leave to stimulate healthy workplaces Ensure EAPs are widely available in small and medium-sized companies, regulate minimum standards and facilitate EAP contracts Single point of contact for employers to receive support and guidance in dealing with mental health matters Help companies access and implement good practices
D	Foster the design of structured return-to-work policies and processes for workers on sick leave and their employers, and encourage a dialogue between the sick worker, the employer and the involved health practitioners.	Limited focus on return to work after sickness, and no public return-to-work support or strategy A unique Accident Compensation system (ACC) with a range of undesirable side effects especially for stress-related illnesses and mental health conditions – a no-fault system with a strict illness-injury boundary	Promote return-to-work strategies with mutual obligations for all actors Replicate the comprehensive ACC approach and process for cases of illness (“learn from ACC”) Consider expanding ACC to cover illness, as intended in the past
Source: Authors’ own assessment based on all of the evidence collected in this chapter.

New Zealand is making great headway in developing cutting-edge, integrated national datasets but there are gaps in information on workplace health outcomes. Data on sickness absence are not nationally routinely collected in any way. This must change as good policy-making relies on a good understanding of what is happening.

New Zealand introduced new workplace health and safety legislation in 2015, to respond to major changes in the labour market and following the creation of WorkSafe as the country’s primary health and safety regulator in 2013. Legislation, however, is still seen as safety oriented, enforcement in terms of work-related health is relatively poor and the capacity of the system to address psychosocial risks is not sufficient.

New Zealand is a role model with regard to mental health awareness campaigns that, more recently, also target the workplace as a priority setting. This, together with a range of toolkits prepared by Work Safe (e.g. bullying-prevention toolbox; guidelines on fatigue) but also the Mental Health Foundation and the Health Promotion Agency, has helped employers to understand the issue. Effective tools for employers are critical in a country in which workers can be dismissed relatively easily and at relatively short notice, in comparison with most other OECD countries.

New Zealand is providing limited assistance to employers facing reduced worker productivity resulting from mental health conditions, and mental health services are difficult to access for people who have a job. This is particularly challenging for the many small and micro businesses which lack the knowledge and resources to address problems or, at the very least, to contract an Employee Assistance Programme provider.

New Zealand has a unique Accident Compensation Corporation (ACC) system which provides comprehensive support in case of injury, work-related or not, on a no-fault basis. The success of the system, however, comes with considerable, undesirable side effects for illnesses, which do not receive the same attention. Stress-related illness and mental disorders in particular are outside the focus of ACC. Instead of investing resources in assessing claims and identifying cases that can be rejected, ACC’s successful early intervention and rehabilitation approach should be adopted for illnesses as well to the extent possible – be it within an expanded ACC system or in other existing structures.

Prevention of psychosocial workplace risks should be strengthened

Employment is generally a positive factor for mental wellbeing and recovery from mental health conditions but high workplace stress and poor management can put a strain on mental health, exacerbate mental health conditions, and trigger the onset of a mental health condition. Employers’ and workers’ awareness of, and ability to identify and mitigate against, work environment risk factors potentially contributing to psychosocial harm is therefore critical. Failure to maintaining a healthy workforce will ultimately have detrimental effects for workers and businesses alike.

Working conditions are relatively good in New Zealand

New Zealand has a strong labour market. The overall employment rate, at 76.9% in 2017, is high, compared with the OECD average of 67.8%, and the unemployment rate, at 4.9% in 2017, is below the OECD average and gradually approaching pre-crisis levels (Figure 4.1). Long-term unemployment, at 15.6% of total unemployment in 2017, is half the OECD level. New Zealand’s labour market is also quite inclusive: the employment gap for disadvantaged groups is lower in New Zealand than in the average OECD country. This is especially true for low-skilled and older workers but also workers with mental health problems (see Chapter 1). New Zealand is also doing relatively well in an OECD comparison of the quality of the work environment: just under one in four workers, 23.3% in 2015, are experiencing job strain. This is among the lowest values among countries for which comparable data are available, and significantly lower than the OECD average of 41%.

The latter is an encouraging finding, based on a unified methodology. However, it implies that one in four workers report job strain, a finding corroborated by national statistics based on the Survey of Working Life. In 2012, the last year for which data is available, 18.3% of workers in New Zealand found their work always or often stressful, and another 40% sometimes – irrespective of age and gender (Figure 4.2). Similarly, 13% say they are always or often too tired to enjoy life outside work, and another 31.5% sometimes. Finally, the survey shows that one in ten workers have experienced discrimination, harassment or bullying in the past 12 months (12.7% of women, 8.3% of men). Such figures suggest work puts strain on many people, also in New Zealand.1

Little is known or published on the degree to which good working conditions are experienced evenly across the population – e.g. regionally or across ethnic groups. Earlier research has suggested Māori and Pacific Island populations experience more bullying but less psychological strain, maybe related to the better supervisor support they receive (Gardner et al., 2013[5]). Data from the Worker Exposure Survey confirm this finding: non-Māori report a higher prevalence of moderate stress (45% vs. 39% for Māori) and non-Māori men also a higher prevalence of extreme stress. Temporary employment, which generally offers poorer security and less protection, however, is more frequent among Māori (13%) compared with the rest of the population (8-9%).2

New workplace legislation has considerable potential

Statutory provisions for health and safety at work (including mental health) in New Zealand are addressed by the Health and Safety at Work Act of 2015, which came into force in April 2016. The Act replaced the former Health and Safety in Employment Act, from 1992, whose provisions were found to fail to guarantee health and safety (MBIE, 2013[6]; Independent Taskforce on Workplace Health and Safety, 2013[7]).

The new legislation introduced a number of key reforms to the previous system, guided by principles of participation, leadership, and accountability among government, employers and workers alike. The new legislation focuses on proactively anticipating and managing the underlying risks that might otherwise result in an injury or illness, in addition to monitoring and recording health and safety incidents. The reforms include a national target to reduce fatalities at work and serious work-related injuries by at least 25% by 2020 (Independent Taskforce on Workplace Health and Safety, 2013[8]).3

Workplace legislation covers all work-related health conditions; physical and psychological, acute and long-term. The Act requires the provision and maintenance of a work environment without risks to health and safety. In a special guide, WorkSafe provides a description of what that can mean; the psychological work environment can include “overcrowding, deadlines, work arrangements (e.g. the effects of shift-work and overtime arrangements), and impairments that affect a person’s behaviour, such as work-related stress and fatigue, and drugs and alcohol” (WorkSafe, 2016[9]).

Where a work situation does result in a notifiable psychological injury, illness or incident, the Employment Relations Act provides a clear legal framework for liability and redress. The Ministry of Business, Innovation and Employment operates a free mediation service for employers and workers for some disputes, with 4 000-5 000 mediation cases per year of which 75% are resolved through the mediation procedure.

The 2015 Act is a step forward and addresses health in a broad sense. Its impact will depend on its enforcement. WorkSafe is working toward ensuring businesses are able to identify a range of risks and is developing a range of materials that will allow for intervention and the prevention of poor work-related health outcomes, including anxiety, depression and social isolation, possibly as a result of physical health hazards. In implementing the objectives of the Act, looking at other countries can be useful. In Belgium, for example, in addition to preparing a psychosocial risk analysis, employers are required to draw up a global five-year prevention plan and more concrete annual action plans. They also have to appoint a psychosocial prevention advisor to assist them in implementing the risk prevention plan (OECD, 2013[10]).

WorkSafe is moving into its broader role

In late 2013, a new crown entity was established, WorkSafe New Zealand, as the country’s prime workplace health and safety regulator.4 WorkSafe’s mandate was further clarified under the Health and Safety at Work Act in 2015, to include three distinct roles: First, regulating workplaces to ensure they manage health and safety appropriately. Second, preventing harm by targeting critical risks at various levels, influencing attitudes and behaviour and intervening, where necessary. Third, providing broader leadership over the health and safety system to improve work-related health and safety outcomes.

WorkSafe has developed three strategic documents to help guide its activities into the mid-2020s:

A Strategic Plan for Work-Related Health 2016-26, outlining its approach to achieving “improved awareness, attitudes and behaviours around work-related health and, through these, better management of work-related health risks and reduced exposures to health hazards” (WorkSafe, 2016[11]). The strategy explicitly recognises psychosocial risks as one of five key categories of work-related health risks (alongside physical, chemical, biological and ergonomic risks) and includes these as a priority for targeted programmes.
A joint action plan to reduce harm in workplaces for the period 2016-26, in partnership with ACC (WorkSafe and ACC, 2016[12]). Due to the mandate of ACC (see more below), the plan almost exclusively focuses on physical health.
A formal strategy for improving workplace health and safety for Māori called Maruiti 2025 (derived from the Māori concept of a safe haven). Among its outcomes, the strategy aims to lower workplace injuries, health-related incidents and fatalities in the Māori community to the levels of the non-Māori population by the year 2025. However, the strategy does not explicitly address work-related mental harm and associated risks.

An independent review was completed in late 2015 that applauded WorkSafe for its high performance at a relatively early stage of development (Martin, 2015[13]). The review made several recommendations some of which WorkSafe has since taken up but it did not choose to focus in any depth or detail on WorkSafe’s newer role around the psychological aspects of workplace health and safety. WorkSafe is gradually shifting its focus to its wider role, including educating employers, within its existing resources. At this stage, WorkSafe has no specific targets on reducing psychosocial risks or on the implementation of risk prevention plans by employers and, similar to the situation in other OECD countries, its inspectors generally lack psychosocial expertise. As society’s expectations change, WorkSafe’s capability and capacity would need to change alongside and additional resources would be required to deliver on those expectations.

Strengthening the implementation of workplace health and safety

WorkSafe appears to have a large and active role around physical safety. By comparison, however, WorkSafe’s coverage of mental health and of psychosocial risks to health still appears to be rather weak. WorkSafe has a clear mandate for this under the new Health and Safety at Work Act. Considerably more can be done in this space, in terms of prevention of harm and provision of leadership, to reduce the number of workers facing psychosocial risks and seeing their mental health deteriorate. WorkSafe is growing its maturity of thinking in this area which has the added complexity of non-work factors contributing to, or exacerbating, workers’ poor psychological health.

One key challenge for WorkSafe is the collection of better data. Today, WorkSafe relies heavily on ACC data, which largely include physical injury harm. To become a modern intelligence-led regulator would require significant investment in data collection (including statistics by ethnicity, gender and age to identify particular risk groups and corresponding risk-prevention strategies) and corresponding IT systems.

Dealing with cases of work-related mental distress or harassment places high demands on employers, workers and WorkSafe. WorkSafe has limited resources and is therefore only able to investigate the most serious cases of work-related harm. Investigation and enforcement activities are risk-based and targeted at the highest risks and harm. In line with this, cases of work-related mental distress or bullying carry a high burden of evidence for workers – including a formal diagnosis from a mental health professional and a paper trail of the abusive behaviour they have been subjected to – before WorkSafe can launch an investigation. Workers also must observe a 90-day notification period since the incident occurred to be able to access any services (beyond this period, they would have to meet the threshold of a serious crime that was investigated by the police). The result of these limitations is that WorkSafe has reportedly investigated only 13 complaints of workplace bullying out of 159 total bullying concerns notified to it since its establishment in late 2013. When notifications do not meet WorkSafe’s criteria for an investigation, people are provided with assistance through referral to another appropriate organisation or to WorkSafe’s guidance resources on workplace bullying.

WorkSafe’s role goes further than investigating mental health complaints and includes supporting employers in their effort to identify and prevent psychosocial risks. For this to happen more systematically, inspectors will need much better competence on mental health and psychosocial risks and WorkSafe would need additional funding to recruit technical experts in work-related psychosocial matters. To promote this, WorkSafe could set itself two targets every year, one related to reducing physical health risks and one to preventing psychosocial workplace risks and stressors.

Moving forward in better enforcing its health and safety legislation, New Zealand can perhaps adopt some of the approaches used in other OECD countries. Denmark provides an interesting example for how to support employers in their new role. The Danish Working Environment Authority has developed a series of 24 both sector- and job-specific guidance tools which describe the prevalence of risk factors and the potential resources a company has to prevent psychosocial problems (OECD, 2013[14]). Inspectors have been trained in how to use these guidance tools, and there are a smaller number of expert inspectors who can assist other inspectors in assessing psychosocial workplace risks and in preparing improvement notices. This goes beyond WorkSafe’s guidance on bullying prevention the purpose of which is also to support its frontline inspectors who also undergo basic module-based training on a number of psychosocial issues in the workplace. Resources in the bullying prevention toolbox are aimed specifically at small businesses and at workers.5

The time might now be right for a renewed focus on the psychological aspects of workplace health and safety. Representatives of New Zealand employers’ organisations report a sense of increased responsibility and “ownership” around ensuring workers’ mental health and generating the necessary dialogue around what individuals might be experiencing. In Canterbury, in particular, the earthquakes that have happened since 2011 have put significant pressure on people’s mental health (Fergusson et al., 2014[15]) and, in effect, produced a catalyst for better engagement around mental health and reduced some of the previous stigma and misunderstanding (Calder et al., 2016[16]).6

Addressing stigma, discrimination and misconceptions

Because mental health conditions are so prevalent in the working-age population, most workplaces will be affected to some degree or at some stage and have to address the resulting consequences. Nevertheless, stigmatising environments towards mental health conditions continue to persist in many workplaces and often make matters worse for those experiencing them. Discrimination may also be common. Such dynamic may discourage workers from disclosing a mental health concern, in turn further increasing stigma and enforcing misconceptions. The dynamics can also create self-stigma, which reduces individuals’ feeling of self-worth, isolating them further and delaying help-seeking and, thereby, impeding their recovery (Thornicroft et al., 2016[17]).

The Human Rights Act, from 1993, prohibits discrimination on the grounds of disability. Under a broad definition, this includes (among others): “(iii) Psychiatric illness; (iv) Intellectual or psychological disability or impairment; and (v) Any other loss or abnormality of psychological, physiological, or anatomical structure or function”. The United Nations Convention on the Rights of Persons with Disabilities, from 2006, likewise applies to individuals with “mental and intellectual impairments” and contains prescriptions around work and employment-related discrimination.

A number of public and non-governmental organisations in New Zealand operate initiatives and campaigns combatting stigma, discrimination and misconceptions around mental health in workplaces. Over time, this has increased awareness of the issues among the general population considerably. Only more recently, however, have these campaigns included a focus on work and employment; this is a very important shift in focus, which should be built upon.

Anti-stigma campaigns and toolkits for employers are plentiful

The Mental Health Foundation is a prominent organisation combatting mental health-related stigma in New Zealand. At the forefront of its work on reducing workplace stigma is the Open Minds campaign, which promotes an online collection of information and training materials aimed at equipping business leaders with the tools and confidence to engage with their workers around potential issues to do with mental health (Mental Health Foundation, 2017[18]). The Mental Health Foundation’s Five Ways to Wellbeing at Work Toolkit (Mental Health Foundation and Health Promotion Agency, 2018[19]) and its Working Well resources (Mental Health Foundation, 2016[20]) also offer additional guidance for employers and examples of good conduct in this area. The Mental Health Foundation also partners with other organisations for the online space Wellplace.nz where employers can access useful tips and tools for building healthier workplaces.7

Another organisation doing prominent work in this area is the Health Promotion Agency, which, most importantly, heads Like Minds, Like Mine – New Zealand’s longest-running campaign combatting stigma around mental health (established in 1997). The stated goal of the campaign is to achieve respectful attitudes and inclusive behaviours towards individuals with experience of mental illness and distress (see also Chapter 2). In its latest version, Like Minds, Like Mine has emphasised the role of employment as a key to recovery. One of the forthcoming three-year community initiatives will have an explicit focus on workplaces and employers, because of an increasing number of requests on behalf of employers in response to the new Health and Safety at Work Act.

The Health Promotion Agency also partners with other organisations to host an interactive online tool called Good4Work that enterprises can use to access useful advice and information (similar to what Wellspace.nz offers).

The Ministry of Social Development (MSD) operates a free telephone line under its Disability Confident campaign that business leaders and managers can call to gain advice around supporting or managing a worker with a disability or health condition, including mental health conditions. More recently, all kinds of helplines for employers as well as persons with health problems or addiction were brought under the umbrella of a new National Telehealth Service, including the Employer Advice Line. The staff that administer the Employer Advice Line are health advisors employed by Homecare Medical, which is contracted by MSD to deliver the service.

Raising awareness and combatting misinformation

Despite a range of available tools, employers in New Zealand reportedly seldom know where to turn or what support they might get when a worker encounters trouble with their mental health. This is partly explained by the disconnect between programmes and resources for managing mental health at work (i.e. employment relationships, public health, human rights, or workplace health and safety). Many employers may fail to engage with the resources on offer before the issue develops into a more significant mental health crisis for the worker and, in turn, the company. In the worst case, employers’ actions may instead fuel the fire if dictated by misconceptions by, for example, piling social or professional pressure onto an underperforming worker or neglecting early warning signs.

However, the private sector is also more and more active in this field.8 As in other OECD countries, some large companies in New Zealand are leading this development, driven by strong leadership. Air New Zealand, Bank of New Zealand, Fonterra, Z-Energy and Vodafone are the ones mentioned most frequently in this context. But the bigger challenge is to involve also smaller and medium-sized businesses which, similar to other countries, make up 95% of New Zealand’s companies and employ half of the New Zealand workforce.9

Some companies in New Zealand have recently moved to create positions for health and wellbeing managers within their human resources departments. A group of such businesses – both large and small – recently came together to form a community of such professionals under the Business Leaders’ Health and Safety Forum and through the Health and Wellbeing Leaders’ Network to develop leadership and share examples of best practices. Their priority themes for 2017 included: building relationships with government agencies such as WorkSafe and ACC; empowering health and wellbeing professionals in their companies; and building media presence to reach out to a larger number of stakeholders.

The driving forces behind this network are Fonterra (a dairy nutrition company employing 22 000 people globally and 11 500 in New Zealand) and Z-energy (a fuel distributor with branded service stations and around 3 000 employees). Both of these companies have strong health and wellbeing policies in place, with a reported return on investment in the order of 2.3 dollars for every dollar put in. Their company policies have a strong focus on resilience and training for managers, annual health surveillance, immediate intervention (including by a clinical psychologist) and peer-to-peer support.

Equipping employers with the knowledge to address such issues in a timely way could be a valuable starting point towards managing psychological risks properly. Employers clearly have an important role to play in complementing social, family and whānau networks. Numerous common life-events represent times when workers may feel exacerbated pressures around their mental health. Such events may also be sector- or business-specific including droughts (for farmers), competitive pressures (for manufacturers and others), technological change (especially for medium-skill industries) and business downturns or periods of retrenchment, more generally. Such events are generally knowable to supervisors and can act as potential red flags to increase vigilance and engage in active dialogue and support, if needed. Left unchecked, or unsupported, such common pressures can manifest into diagnosable mental health conditions.

In conclusion, it appears that there is no lack in New Zealand of campaigns and support tools for employers. The recent inclusion in the various campaigns of a work and workplace focus should be continued and its impact measured. For the support tools, the biggest challenge is dissemination to ensure a wide use by employers. This requires the involvement of private actors and networks with good access to employers. Evaluating the various support tools and their impact in the workplace is important; also as a way to market successful tools to employers.

Understanding the link between mental health and productivity

Mental health conditions can be very costly for employers. Workers experiencing such conditions are absent from work more frequently, on average, and spend longer periods off work than workers with other health concerns. However, the loss in labour productivity is even larger. Workers who experience mental health conditions report performance-related problems more often than others; workers with active symptoms of mild-to-moderate mental health conditions in particular would typically not take extra sick leave but show considerable underperformance while in work if their symptoms remain unrecognised, untreated and unsupported, potentially also affecting their co-workers (OECD, 2015[1]). These dynamics affect the performance of every business.

Evidence on absenteeism and presenteeism is lacking

Unlike most other OECD countries, New Zealand does not routinely collect data on sickness absence. Knowledge about the extent of the problem absenteeism presents for businesses, relevant trends over time, and underlying reasons underpinning sickness absences is therefore limited. This represents an important omission under the current labour market information system and a crucial knowledge gap for policy makers.

Most OECD countries gather data on sickness absences in a systematic manner in two ways. First, virtually all countries collect self-reported information on absence in their regular labour force surveys. Such information, by definition, includes short as well as long-term absences and is therefore the best source for comparative statistics. As is commonly known, however, subjective data will underreport the true level of absence. Secondly, a subset of countries with statutory cash sickness benefits also collect information of absences lasting longer than a certain threshold (i.e. those which generate insurance or benefit entitlements) through their administrative sickness benefit statistics (Vester Thorsen et al., 2015[21]). Such data are more reliable and more detailed (e.g. by duration of absence) but less comparable across countries because of different thresholds used and the large difference in the functioning of the benefit system.

New Zealand is not collecting any self-reported absence data through any of its population surveys and does not have comparable administrative statistics because it does not have a statutory cash sickness benefit. The only data available in New Zealand related to sickness at least to a certain degree are statistics on jobseeker benefit recipients with a health or disability designation (discussed in more detail in Chapter 5). Due to the nature of the benefit payments, which are means-tested and paid to those out of work, however, these numbers do not present any even remote estimate of the level of employee sickness absence in New Zealand.

The only rough information available on sickness absence in New Zealand comes from the Wellness in the Workplace survey; a survey run every two years and sponsored by Business New Zealand, jointly with the Southern Cross Health Society. It is a survey answered by employers who are asked about the average number of days of absence of their employees.10 In 2016, the overall absence was 4.4 days per employee, which is a very low figure in international comparison. Absence levels are higher in the public than in the private sector; higher among manual than non-manual workers; and higher in larger than in smaller companies. Employer-identified absence rates have remained rather stable over time (4.7 days per employee in 2014 and 4.5 days in 2012).

The main drivers of absence in New Zealand were non-work-related illnesses (typically minor illnesses) followed by caring for a sick family member and non-work-related injuries, together explaining more than two-thirds of all sickness absences. Work-related injury and illness plays a minor role. Anxiety, stress and depression is much more prevalent as a cause of absence for non-manual workers but non-work-related anxiety, stress and depression also plays an increasing role for manual workers (BusinessNZ and Southern Cross Health Society, 2017[2]).

There is strong reason to believe that the relatively low level of sickness absence is related to New Zealand’s limited sick pay regulations (see below). As a consequence, presenteeism – people turning up for work even though they should stay home due to illness – is likely to be high. The full extent of presenteeism is unknown but the same employer survey also contains hints about the degree to which employees come to work sick: some four in five employees commonly seem to do so, according to their employers’ impression, with only one in five rarely or almost never coming to work sick. As expected, presenteeism is more common in the private sector in New Zealand. On the other hand, the survey also suggests that the large majority of businesses have a culture of encouraging employees to remain away from work if they are ill.

It is disturbing that New Zealand has never made an effort to collect data on employee sickness absence in a more systematic manner. Such information is critical for policy makers in understanding the impact of existing rules. Every effort should be made to include questions that are used in other OECD countries in several of New Zealand’s population surveys, including especially the Labour Force Survey and the New Zealand Health Survey.

Employer-provided sick leave is meagre

In New Zealand, sickness is a topic that does not get the attention it deserves, in terms of data but also corresponding policies. Consequently, there is only limited protection available for workers falling ill. Under New Zealand’s Holidays Act, from 2003, most employees are entitled to 5-20 days of paid sick leave on a statutory basis.11 Within the first six months of their work, a new employee is not entitled to any paid leave under the statutory rules. Beyond the first six months, however, employees gain statutory rights to five days of paid sickness absence per year, with the ability to carry over unspent days up to a maximum allowance of 20 days at any given point in time. When paid sick days are used up workers can use their annual leave entitlement instead or seek unpaid sick leave.12

Nothing is known about the actual sick-pay entitlements workers in New Zealand can access and for how long. Data from the 2012 Survey of Working Life give some hints in this regard although the information available is about total paid leave entitlements, not sick leave entitlements. Permanent workers, a group comprising 90% of all employees in New Zealand, typically have four weeks of paid leave every year, with a significant minority of 18% having more than four weeks and a minority of almost 8% having no such entitlement; half of the latter will instead have a slightly higher wage (Figure 4.3). The situation is very different for casual workers who rarely have any leave entitlements. Half of them, however, will have casual loading i.e. a somewhat higher wage that compensates the lacking leave entitlement. Temporary workers will find all kinds of situations although also among them one in four have no leave entitlements. This suggests that not having any sick pay in case of an illness is a common situation for temporary and especially casual workers. Permanent workers will have some entitlements but they rarely seem to go beyond the statutory minimum.

From an international perspective, it is surprising how little discussion there is in New Zealand about the poor protection of workers falling ill. Only two other OECD countries, Korea and the United States, find themselves in a similar situation, partly explaining high levels of poverty in all three countries for this group of people. Research in the United States has repeatedly shown that the lack of sick-pay in most States leads to higher rates of presenteeism for seriously ill people who should stay home, thereby increasing infection of co-workers (Drago and Miller, 2010[22]). Likewise, research has demonstrated that paid sick days benefit both the employer e.g. in the form of reduced turnover and work injuries and the worker e.g. through improved employment stability, higher labour force attachment and more timely treatment (Milli, Xia and Min, 2016[23]). There is considerable room for New Zealand to improve the situation, by extending the period of employer liability and broadening entitlements for non-permanent workers.

Protection for sickness is much broader in other OECD countries

Most OECD countries implement income support measures for employees undergoing temporary absences from work related to illness or injury. Countries typically use a combination of two types of policy measures:

Employer liability for sickness places a burden of duty on employers to provide for eligible workers during a period of ill health. Employers may be obliged to pay part (or all) their worker’s salary, over a specified period of their absence.
Cash sickness benefits can provide more extensive income support for workers in case of sickness beyond the period of employer liability. Such income support could be related to the worker’s own earnings but it could also be means-tested.

Many OECD countries mandate employers to continue paying an absent worker (in full or in part) over a period of around one to three working weeks. In several cases, however, employer liability covers a much longer potential period of time: extending to around six weeks in Germany and Poland; 11-12 weeks in Austria and Luxembourg; 18 weeks for some workers in France; 26 weeks in the United Kingdom; 36 weeks in Italy; and two years in the Netherlands (Spasova, Bouget and Vanhercke, 2016[24]). In some countries, such as Switzerland, Israel, Finland and France, employers may be bound to equivalent obligations under the terms of their workers’ employment contracts or via a collective agreement. In countries that do not regulate employer liability, such as Canada and the United States, it is predominantly at employers’ own discretion to decide what support to offer a sick worker.

Cash sickness benefits usually extend far beyond the limited provisions of employer liability for sickness. Korea and the United States, together with New Zealand, are the only OECD countries which do not have a dedicated cash sickness benefit programme.

Figure 4.4 illustrates the income protection provided to employees for sickness in selected OECD countries. Three dimensions determine the scope of income support, which cash sickness benefits may provide: the maximum duration for which cash sickness benefits are paid; the value of the cash income support provided; and the interaction between cash sickness benefits and employer liability.

First, some countries offer support for relatively limited periods of time (such as 15 weeks in Canada) while others do so for up to 18 months or longer (such as Germany, the Netherlands, Portugal or Japan) or indefinite periods of time in case a recovery is expected (such as in Slovenia and the United Kingdom) (Social Security Administration, 2016[25]). Secondly, most cash sickness benefits are calculated as a share of the claimants’ usual work-related income, commonly compensating anything from 50% of this amount (as in Canada) to 70% in most countries (including Germany, Portugal, Japan and the Netherlands) to all of it (as in Luxembourg and in some of the Nordic countries), subject to floor and ceiling amounts. Thirdly, some countries rely exclusively on employers’ liability (such as the Netherlands and Switzerland) while others have only social insurance without any employer liability (such as Canada, Japan or Portugal). Most, however, rely to some extent on both (Spasova, Bouget and Vanhercke, 2016[24]). In some countries, such as Portugal, sickness compensation varies over time while in others, such as Luxembourg, employers pool their own liability risks through a mutual insurance fund. Such collective insurance can be operated nationally or privately. Mandatory schemes also sometimes entail opt-out clauses for large firms that are big enough to manage their own risks unilaterally.

The six cases outlined in Figure 4.4 illustrate a variety of possible approaches to providing social protection for sickness, although they are not exhaustive. The majority of OECD countries provide cash sickness benefits for a period of at least six months, in accordance with medical evidence on treatment and recovery times which suggests that such length of leave is important to cover more severe illnesses (Raub et al., 2018[26]). Most systems also replace a large part of a worker’s wage to prevent harsh income losses. As the social protection system in New Zealand is entirely means-tested, providing cash support only to those in acute need, introducing a significant degree of statutory liability for employers for all workers who fall sick – beyond current limited sick-leave entitlements – would seem an important step to take. This would strongly increase the incentives for employers to attend to psychosocial workplace risks, and their responsiveness to mental health issues in the workplace (Kendall et al., 2015[27]).

Like in other OECD countries, insurance companies in New Zealand also offer private income protection insurance for people temporarily ill. Because of the lack of a publicly or privately regulated sickness cash benefit programme, such private insurance plays a more critical role in New Zealand than in other countries where such insurance will often just top-up public entitlements. Little is known about insurance coverage and the type of protection offered in New Zealand. Estimates from the insurance sector suggest that some 17-20% of the workforce has access to private income protection insurance (Financial Services Council, 2017[28]). Insurance can be individual or group based and will involve risk-rated premiums. The extent to which these premiums are covered by employers and/or employees is unknown. The scope and level of support can differ considerably between insurance products: ranging from income protection for several months or a year (i.e. like other countries’ cash sickness benefit payments), to the entire working life until age 65 (i.e. like a generous disability insurance payment).

Overall, the minimal available evidence suggests that only few New Zealanders have private income protection insurance, with considerable differences across insurance contracts. It is also likely that within-company inequity is considerable. There are no data available to corroborate this but similar data on private health insurance coverage offered by New Zealand companies show that of all those companies which offer such insurance, only around 60% do so for all of their employees (BusinessNZ and Southern Cross Health Society, 2017[2]). These data also show that large companies are much more likely to offer private health insurance: coverage rates range from 16% in companies with less than 50 employees to over 60% in companies with 50 or more employees (the overall average is around 40%). While this suggests that private health insurance is more common in New Zealand businesses than private income protection insurance, it is likely that coverage rate differences are similar. An alternative strategy for New Zealand therefore could be to promote income protection insurance, for example through tax deductions for insurance premiums especially for small and medium-sized companies, with the aim to reduce workforce inequalities.

Managing workplace stress and mental health problems

With limited income support available for workers who are ill and temporarily unable to work, compared with other OECD countries, coupled with lenient employment protection legislation in comparison with the OECD average (OECD, 2013[29]), there is a considerable risk in New Zealand, higher than in other OECD countries, that sick workers could lose their job. This raises questions about workplace practices in New Zealand to monitor sickness absence and about the support that is available to manage workplace stress and mental health problems of workers and to prevent presenteeism and absenteeism.

Employee Assistance Programmes (EAPs) appear to be the principal stay-at-work support available for workers encountering mental health difficulties in New Zealand. Companies often offer EAPs to their employees as part of their wider health and safety programme or as part of a broader managing-diversity strategy. The 2017 Wellness in the Workplace Survey indicates that four in five large companies in New Zealand, with 50 and more employees, contract an EAP provider. Among smaller companies, which represent 43% of the labour market, however, the corresponding share is only around 30%. Smaller firms are also less commonly offering the possibility to work from home or more flexible hours, as a way to accommodate personal circumstances.

EAPs give employers the ability to pay someone else to take a problem off their hands. They offer confidential, short-term counselling for employees with personal problems that affect their work performance, whether or not those problems originate in the workplace. The exact set of supports will vary from provider to provider, as there are no regulations in place in New Zealand on minimal support an EAP provider must offer. There are different options for organisations to provide EAP to staff including:

Contracting a single provider and paying a set fee based on the number of workers in the organisation. Such the employer does not know who is using the service so employees can feel that their use of the service is completely confidential.
Contracting a single provider and paying per counselling session. This can be done more confidentially if the employee can go through a designated contact person in the organisation, so the person’s name can be protected.
Contracting with specific providers as and when needed. The advantage of this is that specialist providers can be used, targeting the person’s specific situation. Again, if a designated contact person is available within the organisation, this will assist with the protection of the person’s name.

EAPs provide a useful mediator for complex situations, including bullying and abuse cases, typically including three counselling sessions free of charge though some employers may go beyond and pay for more tailored psychological support. One of the problems is that EAPs generally provide little guidance for employers to understand the problems and their relationship to the workplace. Confidentiality can force employers into a situation where they do not know what is going on with an employee or how best to facilitate their recovery.

Nevertheless, EAPs are a useful tool and efforts should be made in New Zealand to increase coverage in small and medium-sized firms, which tend to be less aware of the need for action. For example, while larger companies make various efforts to identify workplace stress through staff surveys or the provision of training to managers to identify and manage stress, this is rarely the case in smaller companies (BusinessNZ and Southern Cross Health Society, 2017[2]). Research in the United States has shown that contracting an EAP provider can contribute to decreased absenteeism, greater employee retention and reduced medical costs because of earlier treatment (Hargrave et al., 2008[30]; Lam and Walker, 2012[31]). Contracting EAP providers should be facilitated and could be supported financially for smaller companies, and minimum standards should be regulated to ensure all EAP providers offer a basic set of supports.

However, EAPs alone will not be enough; other structures and systems need to be improved or involved. For instance, New Zealand’s employment service, Work and Income, will not intervene until a person has actually lost their job and entered onto benefits. In other countries, the Public Employment Service or the Social Insurance Authority has a strong role in dealing with health-related problems in the workplace early on. In Norway, for example, every employer has a contact person in the local labour and welfare office who can provide advice and refer employers or employees quickly to the right service (OECD, 2013[32]). In Switzerland, as another example, the disability insurance authority has invested considerably in helping employers quickly when health-related problems arise – in order to prevent much larger costs for them later for people dropping out of the labour market altogether (OECD, 2014[33]).

More generally, occupational health knowledge in workplaces is of paramount importance in the light of the fact that good work contributes to good health and good health improves engagement and performance. Several OECD countries have strong occupational health policies in place encouraging employers to bring corresponding knowledge into their company. In the Netherlands, for example, occupational physicians are a part of company life, as the law obliges employers to consult an occupational physician in managing their workers’ sicknesses (OECD, 2014[34]).

Statutory regulations are limited. New Zealand’s Employment Relations Act ensures employees have a right to request alternative working arrangements from their employer in relation to their working hours, working days and place of work. This provision encourages employers and employees to have an open discussion on how to manage work-life and balance it against any external factors; this could contribute to reduced absenteeism, increased employee engagement and improved productivity. While employers are obliged to deal as quickly as possible with request for alternative working arrangements, they may also refuse to accommodate them on a variety of grounds. However, New Zealand’s Human Rights Act and the Health and Safety at Work Act not only oblige employers to manage workplace hazards – including those applicable to mental health – but also to implement reasonable accommodations to address particular needs, where necessary. In some cases, such an accommodation may include a gradual return to work.

There is ongoing work to ensure all employees and employers understand their employment rights and obligations. The work includes pre-employment guides that assist employers and recruiters in complying with anti-discrimination provisions under the Human Rights Act and the Flexible Working Policy Builder, an online tool to help employers develop workplace policies on flexible work arrangements. In mid-2018, Business NZ launched a new health and wellbeing policy as part of the Workplace Policy Builder, a tool that allows businesses to create a variety of policies tailored to the needs of their workplace, covering a range of health and wellbeing-related topics.

Ultimately, the biggest challenge is to support smaller and medium-sized enterprises in their efforts to help employees with stress and mental health-related problems. Larger companies can invest in a broader health and wellbeing strategy, which may include private income protection as well as health insurance and a support plan that involves the employee, the manager and a health professional such as a mental health nurse. Smaller companies rely on structures that they can access and afford.

Improving return-to-work policies and processes

When workers fall ill and stop working, initially for a temporary period, providing cash benefits is only one aspect. Protection for sickness also requires a sound strategy for rehabilitation and return-to-work to ensure workers return to work quickly and with re-established work capacity. Such strategies seek to reintegrate beneficiaries in their former workplace or, if they have lost their job in the meantime, into the labour market more generally. It is of utmost importance to avoid longer sickness absences from work. Data for the United Kingdom show that four weeks of sickness absence is a critical intervention point (Black and Frost, 2011[35]) and data for a number of other OECD countries show that after three months of absence, the likelihood of a return to the labour market is very low (OECD, 2015[1]). Return-to-work strategies are also fundamental for combatting benefit traps cash sickness benefits may encounter – something that is hardly an issue in New Zealand, however, unless people have access to private income protection insurance.

Return-to-work strategies in OECD countries are diverse

A comprehensive return-to-work strategy is particularly important for workers on sick leave on the grounds of mental health conditions. For many mental health problems, the alienation from work can lead to an alienation from society thus exacerbating the health problem. As work generally contributes to recovery, being on sick leave for a longer period can be counterproductive. At the same time, for some workers work will often have contributed to their mental health problems, thereby making a return to the previous job less attractive.

OECD countries approach rehabilitation and return-to-work in a variety of ways. For example, some countries (like Austria, Denmark or Finland) provide partial capacity benefits for beneficiaries returning to work gradually upon regaining their work capacity (Spasova, Bouget and Vanhercke, 2016[24]). Research from Finland, which has introduced such legislation only recently, shows that a gradual return to work helps people to achieve higher rates of work participation (Kausto et al., 2014[36]). Some OECD countries build rehabilitation conditions into the entitlement rules of their benefit measures. Sickness benefits in Sweden, for example, apply a “rehabilitation chain” to ensure beneficiaries regain employment if they can. In the first 90 days, the aim is to return the worker into the previous job; in the next 90 days into any other job for the same employer; and thereafter into any job in the Swedish labour market (OECD, 2013[37]). Beneficiaries undergo a medical assessment at each stage in the chain to determine their work capacity. Other countries provide rehabilitation through the supporting services they provide under their health service, their public employment service or, possibly, some entity specialised in dealing with helping workers on sick leave. The United Kingdom, for example, launched its Fit for Work service in 2015, after a trial phase of several years, to provide advice and case-managed rehabilitation and return-to-work support, via telephone or online, to employers, employees and general practitioners. The optional service is free to access after four weeks of sick leave. Similar services operate in other OECD countries, e.g. Austria, Ireland or the Netherlands, where sometimes quick referral to psychological therapy is also possible (OECD, 2014[38]; Department for Work and Pensions, 2015[39]).

In New Zealand, little is in place for workers who are sick unless they or their employer has purchased income protection insurance. The latter contracts will often include early capacity assessment, rehabilitation and access to psychological therapy, especially if the insurance product contains longer-term benefit payments – largely for economic reasons to contain the costs arising from potentially long insurance claims.

Otherwise, return to work after a sickness absence is a highly under-recognised issue in policies and workplace practices in New Zealand. In this regard, a new initiative jointly started by the New Zealand Chamber of Commerce and Pegasus Health, a primary health organisation, is worth mentioning as it aims to increase the awareness of the issue among employers and doctors and to bring employers and doctors together in an effort to return employees on sick leave back to work faster. It will be important to follow this initiative closely and evaluate it rigorously and to explore its potential for a broader scale-up.

ACC is slowly recognising mental injury claims

One public system in New Zealand, nevertheless, has a strong focus on early intervention, medical and occupational assessment, vocational rehabilitation, and a fast return to work: the Accident Compensation Corporation system (ACC). ACC however, only covers accidents and related injuries, not illnesses unless they are caused by work. Injuries are covered on a no-blame basis irrespective of whether they are work-related.

Since October 2008, ACC also provides compensation for “work-related mental injuries” involving a discrete causative event at work resulting in a clinically significant behavioural, cognitive or psychological dysfunction.13 ACC requires successful claims for work-related mental injury to meet a number of criteria (ACC, 2018[40]):

The injury was caused by a discrete event that occurred suddenly (i.e. arose quickly with little or no warning).
The causal event occurred in a person’s place of employment or has a direct causal link to their work.
The person must be in employment, defined as “work for the purpose of pecuniary gain or profit”, thus excluding volunteer work.14
The claimant has a diagnosed behavioural, cognitive or psychological dysfunction (temporary distress that constitutes a normal reaction to trauma is not covered).
The event must reasonably be expected to cause mental injury to people generally (i.e. it would provoke extreme distress, horror or alarm in almost everyone and it falls outside the normal range of human experience).

ACC can thus provide compensation for workers exposed to a traumatic event within the workplace but not for those developing mental health conditions via gradual, cumulative or chronic work-related stressors or events that reoccur over a sustained period, such as workplace bullying. Thus, the potentially entitled group is small with less than 100 such claims every year. The share of mental injury claims in total ACC claims fluctuates around 0.1% or 1 500-2 000 claims every year, out of 1.9 million total claims.15 The unentitled group contains the large majority of those experiencing problems around mental health since mental health conditions are considerably more prevalent than the mental injuries under ACC’s narrow definition.

Return-to-work support under ACC can be comprehensive

For coverable conditions, ACC may provide occupational therapy and coordinate with a claimant’s employer as part of a gradual return-to-work or rehabilitation plan. Vocational rehabilitation is open to individuals who are currently employed but absent from their work or not employed but encountering a loss of potential earnings (including students, for example, and unemployed persons).

For recognised work-related mental injuries, ACC case managers contract occupational therapists (either through their local district health board or from the private sector) to work with the claimant’s employer to develop a return-to-work plan. Claimants gain support in the time they have off work, with employers covering the worker’s pay during the statutory amount of days. Employers are kept engaged during the entire vocational rehabilitation process. A gradual return to work is also possible.

The primary aim of the ACC process is to return eligible claimants to their preinjury job. This is not always possible, not the least because people may often lose their job during the rehabilitation process. In this case, various scenarios are possible. If the claimant’s work capacity was restored successfully but the job was lost, ACC could offer a back-to-work programme and help the claimant find a new job. This would only cover a limited period, before a claimant would be referred to Work and Income. If a claimant develops an illness during the rehabilitation process which is not related to the initial accident, ACC cannot continue its support and entitlements and will transition the claimant to Work an Income.

For claimants who are unable to return to their pre-injury employment despite vocational rehabilitation, the aim of the ACC process is to achieve vocational independence, once an injury has healed or stabilised. The law in this case does not require restoring a claimant to an occupation of an economic and social status comparable to that before the injury or to take into account the actual current labour market realities (e.g. in cases where skills of a claimant are outdated). Once rendered vocationally independent, ACC payments are stopped after a period of another three months. Research has shown that just over half of those who were rendered vocationally independent actually returned to work (Armstrong and Laurs, 2007[41]) and that claimants’ wage losses got larger the longer they have been out of work prior to being assessed as vocationally independent (Crichton, Stillman and Hyslop, 2005[42]).

De facto, however, vocational services are the exception: of all mental injury claims, for example, in 2016 only about 2.5% have gone through an initial occupational assessment and some 2% have received vocational rehabilitation services. This is also explained by the fact that far below 10% of all mental injury claims come from former workers; all other claims are from formerly inactive people. The share of claimants receiving vocational services is thus higher among other injury claims.

Expanding ACC to cover illness as well

Current ACC rules imply that effectively every year about 40 New Zealanders may receive vocational services in response to a mental injury claim, i.e. de facto no one. The potentially thousands of workers struggling with chronic often stress-related mental health conditions are excluded by definition and may often drop out of the labour market without receiving any such support. The same is true for an equally large number of physical illnesses of a chronic nature for which it is not possible to establish any causation with work and for all congenital disorders. This situation is disappointing: ACC has considerable resources and potential but not for the thousands of people who have mental health conditions, or other health conditions.

There are three options for the New Zealand government to change this situation. The first and grandest option is to revert to the Woodhouse principles underlying the introduction of ACC and to develop a system covering injuries and illnesses on an equal footing. This is not a new idea. It was the original intention when ACC was introduced, initially for injuries only to test the viability of the scheme but with the aim to include, at a later stage, all diseases. Only occupational diseases were included in the new scheme in 1972, importing the occupational-disease provisions from the previous Workers Compensation Act from 1956. It was also the plan pursued by the government of the time in 1989, following several Commission and Committee Reports (partly headed by Sir Owen Woodhouse), which was scrapped by the incoming government in 1990 (Duncan, 2016[43]). And extending the provision of ACC is also the aim of a new initiative currently explored by Warren Forster through a research grant by the Law Foundation at the occasion of the 50-year anniversary of the Woodhouse Report.

Expansion of ACC to cover all illnesses would require a reorientation of the health system, re-drawing the boundaries between the health, the welfare and the ACC system, and rethinking some of the rules and regulations, including the funding model. Expanding ACC is potentially costly. The risk to the financial sustainability to the scheme and the increased burden an expansion would likely place on both levy and tax payers is the main reason why policy makers are shying away from implementing the Woodhouse principles. However, transition costs could partly be offset by ACC’s large reserve or investment fund and in the longer term, considerable savings can be realised from eliminating the costly process of identifying eligible injuries.16

A second, less costly option for New Zealand is a partial expansion of ACC. One of the principles of a partial expansion could be a shift in focus to work-related health problems. New Zealand has a long history of neglecting chronic health effects of work. Various authors have addressed the question of how coverage could be broadened to include chronic work-related health problems. Duncan (2016[43]), for example, has argued that this also requires a shift in health and safety standards from safe work to healthy work, as argued in an earlier section of this chapter, as well as the development of a new set of enforcement tools.

Expanding ACC coverage for chronic work-related health problems certainly means it would cover a significant number of potentially stress-related mental health problems. This is a general challenge for Workers Compensation schemes around the world, which often struggle with this question. Systems in some countries are very rigorous: in Switzerland, for example, mental health conditions can only be covered if the claimant can prove that the illness was to at least 70% caused by work which is virtually impossible; accordingly, such cases hardly exist in Workers Compensation claims (OECD, 2014[33]). On the contrary, countries which are more lenient are recently seeing a massive increase in mental illness-related Workers Compensation claims; in Australia, mental illness claims today account for about 12% of all claims and – because of the often long-term nature of these claims – even one-third of total costs of the system (OECD, 2015[44]). It is in the hands of the legislator to decide what coverage level a system should provide.

The idea of a partial expansion of ACC is not new. Oliphant (2016[45]) has argued that the Woodhouse principles – which point to a universal scheme – are not helpful in thinking about partial expansion of ACC and that some mid-level principles are needed. In his view, any expansion should build on the idea that a public system must cover all those cases of incapacity that cannot legitimately be left to the private sphere, thus transgressing the boundary between injury and illness; congenital disorders in his line of argument, for example, should be covered by ACC.

A third option for New Zealand is to learn from ACC without expanding the coverage of the system itself. ACC is well placed to help people with injuries back into work at their own pace and over a long time, if necessary; and it achieves a return to work by involving all actors, including employers and general practitioners, in the process. It also has a comprehensive set of vocational services at hand, which it can use flexibly. No other institution in New Zealand is doing this in the same way. As much as possible, this approach and process could be replicated for cases of illness, especially mental health conditions, including very early intervention but also ongoing support, case management, effective return-to-work plans, access to integrated medical and vocational rehabilitation, and collaboration between employers and treating doctors. Other institutions, especially Work and Income, could adopt all of this for their clients.

Conclusion

New Zealand belongs to the group of OECD countries in which the link between mental health and work and the key role of the workplace are well understood, owing to long-run awareness-raising initiatives and the intellectual closeness to the United Kingdom where research on the health benefits of work is most advanced. However, that knowledge is not sufficiently reflected in policies and legislation. Partly this is because policy in relation to employers and workplaces is generally non-interventionist, similar to the United States and different from many European countries, and employment regulations therefore rather moderate and often leniently enforced. In order to help workers who are facing mental health challenges and to help employers who are struggling with health issues of their workforce, better policy and stricter enforcement and implementation of existing regulations is sometimes needed.

Health and safety at work legislation is a good example. While the intentions of recent reforms are laudable, regulations are not binding enough, implementation is weak, obligations of employers vague, and guidelines and supports for employers insufficient. Sickness policy is another example in case. Employer obligations vis-à-vis sick workers are mild and ineffective, public policy is largely inexistent compared to other countries, and the extent to which sick workers will receive support is therefore highly variable. Finally, regulations on work-related health problems are also problematic, putting people facing chronic stress and mental challenges at a particular disadvantage. This is a consequence of ACC reform in the 1970s, which cut a big divide between injury and illness and resulted in relatively poor care and support for everyone not eligible for ACC compensation and services (and, correspondingly, quite generous and effective support for those eligible for ACC).

People with mental health conditions are amongst those disadvantaged most from the structural weaknesses in the New Zealand system. Much could be done to improve the situation. Moving forward, special focus should be given to four aspects:

How to expand the strengths of ACC to a larger part of the population;
How to better support employers, especially small and medium-sized businesses;
How to best support workers on sick leave with chronic (mental) health problems;
How to strengthen the monitoring and implementation of existing legislation to improve outcomes and identify needs for further reform.

All of this will also require significantly improved data collection in a number of fields, especially including information on sickness absence, to make the Integrated Data Infrastructure more meaningful and useful to support the labour force participation of people with mental health conditions.

References

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Notes

← 1. Other data sources suggest that the prevalence of workplace bullying might be even higher. In a 2013 survey of the Public Service Association, one in three reported experiences of workplace bullying in the past six months. In a survey of employees across health, education, hospitality and travel sectors, the corresponding share was 18%. In a survey of the senior medical workforce, in 2017, 37% self-reported being bullied and two-thirds reported witnessing bullying of colleagues.

← 2. The next national worker exposure survey, which was commissioned to Massey University, will include psychosocial questions to help address the absence of exposure data on psychosocial risk factors in New Zealand. Results are expected in February 2019.

← 3. A serious work-related injury is one that results in hospitalisation and represents a probability of death (at admission) of at least 6.9%.

← 4. WorkSafe is the prime health and safety regulator covering all workplaces in New Zealand apart from a few niche exceptions, which include work that takes place on seafaring vessels and in or around aircrafts and non-civilian workplaces operating under separate laws.

← 5. https://worksafe.govt.nz/the-toolshed/tools/bullying-prevention-toolbox/

← 6. In this context, the Canterbury Safety Charter is worth mentioning which was established with the help of WorkSafe. The charter is an agreement on health and safety between more than 370 organisations to ensure everyone involved in the post-quake rebuild goes home safe and healthy.

← 7. The Mental Health Foundation also organises two national-level anti-stigma events each year with inputs into workplace mental health: Mental Health Awareness Week and Pink Shirt Day. The former runs over a week-long period in October, seeking to promote wellbeing in the workplace through a series of activities designed to disseminate information and stimulate discussion. The latter is a smaller-scale event focusing on promoting ideas around reducing workplace bullying and, more generally, promoting diversity. The Mental Health Foundation is also involved in a number of smaller-scale campaigns and events specific to certain regions or economic sectors.

← 8. One initiative worth mentioning was Mindful Employer NZ, a pilot programme launched in one region of New Zealand in 2012, run by Platform Trust and Workwise and inspired by a similar programme in the United Kingdom (http://www.mindfulemployer.net/about/). The pilot, which was discontinued before it was scaled up, was dedicated to supporting employers and raising awareness and understanding of mental health issues in the workplace, with a single point of information and navigation to resources on mental health.

← 9. According to statistics for February 2016, 47% of the New Zealand workforce was employed in companies with more than 100 employees; 10% in those with 50-99 employees; 25% in those with 10-49 employees; 7% in those with 6-9 employees and 11% in those with 1-5 employees.

← 10. The survey findings are based on a relatively small sample of 109 private and public business entities, which, however, well reflects the structure of the New Zealand workforce in terms of establishment size and industry structure. In total, the businesses in the sample employed 93 125 workers, of which 83 994 were permanent staff.

← 11. While the government has no immediate plans to change the current provisions relating to sick leave, it has recently established a taskforce to review the Holidays Act and recommend changes to government. The scope is for a full review of the Act, focusing particularly on the provisions of, and payment for, holidays and leave entitlements, but with a remit to consider any other issues that arise in the course of the work of the taskforce.

← 12. Regulations in New Zealand are very different in case of injuries. If an employee has an accident or injury covered by the ACC scheme, the following applies: a) If an employee has a work-related accident, the employer has to pay “first week compensation” equivalent to 80% of the employees’ earnings; b) If an employee has a work-related or non-work-related accident and receives compensation from ACC, the employer cannot make the employee take time off as sick leave or annual holidays; c) If an employee is getting weekly compensation from ACC, the employer does not have to pay the employee; d) If the period of leave on ACC is more than five days, the employer and employee can agree that the employer will top up the ACC payment from 80% to 100% by using one day of employee’s sick leave for every five days’ leave taken.

← 13. Note that the introduction of ACC cover for work-related mental injury, in 2008, came about partly in light of public outrage at the highly publicised case of Bruce Gardiner. He worked as a milk tanker driver in Hamilton and developed a post-traumatic stress disorder (and eventually went into medical retirement) following a work-related road accident in 2002 when a young man died after driving his car into the front of the milk tanker.

← 14. While there are no plans currently to change ACCs approach towards coverage for mental health related injuries, the government is currently undertaking an analysis on the possibility of expanding mental injury cover for volunteer workers.

← 15. It should be noted that the large majority of all ACC claims are short-term: only about 0.4% of all claimants were in receipt of weekly compensation for a period of six months or more.

← 16. The no-blame feature of ACC has barred all suits for compensation for personal injury from the courts. However, instead ACC has created a large legal market of its own right engaged in distinguishing illness from injury and identifying eligible accidents. The total number of successful claims – almost two million claims for a population of less than five million – is telling: the incentive to lodge an ACC claim is tremendous and lawyers are often successful when they challenge a rejected claim.

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