The consultancy has also released data from two insurers showing that in 2010 mental health issues were cited as the primary cause of income protection claims by UK employees. The findings have cost implications for company healthcare plans which are traditionally slanted towards addressing employees' physical ailments.
According to data gathered from 2010 by Mercer from two of the UK's largest income protection providers, Unum and Canada Life, mental health issues were cited as the cause of around 30% of the claims made in the UK against corporate income protection schemes.
In 2004, claims citing mental health as a cause averaged 27.8%. Mercer believes that this rise is a long-term upwards trend driven by increased awareness of, and willingness to discuss, mental health issues by employees and a greater understanding by employers of the commercial impact if left unaddressed. The data released by Mercer is taken from around 375,000 claims and comes following the related publication of a recent academic study, published in the Journal of Occupational Medicine, which shows that mental health has overtaken musculoskeletal complaints as the main cause of incapacity benefit claims in the UK.
The trend is also reflected by data from Mercer's Pan European Health & Benefits Survey, which found that, out of 502 companies across Europe and in the UK, mental health issues were cited as the largest cause of long term absence amongst their staff, slightly above musculoskeletal causes.
Wolfgang Seidl, EMEA head of health management at Mercer, said: "Understanding and awareness of mental health conditions and the impact that it has on an employee's productivity has leapt forward in recent years. This may be reflected in the figures as employees are more open in discussing mental health issues.
"The good news is that many employers are aware that their employees' happiness affects their concentration, accuracy, behaviour and absence rates and are willing to respond to this.
"But employers must endeavour to remain ahead of the curve. Medical insurance costs associated with mental health are heading upwards and will rise further as the state retreats. Good data gathering and the correct policies in place will help."
Companies are much more tuned into how their employees' mental health has direct financial consequences.
According to Mercer, forward-looking organisations have shifted their emphasis to managing claims and underlying causes and mental health has come to the forefront of their attention.
"To get a handle on the lack of data and spiralling health care costs, we are advising clients to create a triage system using a qualified member of staff in a gatekeeper role," said Seidl. "This allows the company to respond in a more focused manner to employees' mental health issues. The company can gather good data on mental health in the organisation and from there can allocate resources to the right areas."
However, while the cause and effect can appear relatively obvious, the situation is complicated by a general inability by companies to gather information on the causes and details of employee absences. While many companies state that mental health is the prime cause of long-term absences, twenty five percent of UK respondents to Mercer's European Survey, said that their companies had no good access to data on the causes, duration or cost of their employees' absences. Of those that did have some form of measurement, the majority focused on duration of absence (73%), cause of absence (43%) and cost of absence (19%).
Seidl added: "On the one hand, we know that mental health is a problem, we know that absence is a problem and we know that there are likely to be cuts in state provision that will exacerbate the situation yet a large proportion of companies don't know why their employees are absent. This isn't good business practice and costs organisations' money.
"Poor mental health and high absence rates leads to high staff turnover, recruitment challenges, high compensation claims, reputational issues and an inability to meet contractual deadlines."
Mercer has highlighted that while the details of NHS reform have been on hold pending further consultation, the original proposals aimed to give consortia of GPs decisions over what services to provide in an area. The limited specialist knowledge that GPs have on mental health may affect commissioning choices and mental health services - often perceived as a less tangible illness - have often borne the brunt of health budget cuts.