The report has made 40 recommendations for businesses, regulators, the government and the public sector after it found one worker in six suffers from a mental illness and 300,000 people with long-term mental health problems lose their jobs every year.
The independent review, Thriving at Work, was led by mental health campaigner Lord Dennis Stevenson and Paul Farmer, chief executive at Mind and chair of the National Health Service (NHS) Mental Health Taskforce. It says poor mental health costs employers up to £42bn a year with an annual cost to the UK economy of £99bn.
It has called on the HSE to increase its focus on mental health during inspections, revise its existing enforcement on mental health risk management, and build on its "narrow" management standards for stress.
The report sets out a framework that it says all UK employers, no matter what their size or industry, can implement quickly to address workplace mental health.
These "core standards" are: implement a mental health at work plan; develop mental health awareness among employees; encourage open conversations about mental health and available support; provide good working conditions and ensure employees have a healthy work-life balance; promote effective people management through line managers and supervisors; and monitor employee mental health and wellbeing.
Four additional "enhanced" standards have been outlined for large employers and the public sector who "can and should do more to lead the way", according to the review.
These are: increase transparency and accountability through internal and external reporting; demonstrate accountability; improve the disclosure process; and ensure provision of tailored in-house mental health support and signposting to clinical help.
Acknowledging that "regulators have an important role to play in encouraging employers to effectively implement the mental health core and enhanced standards", the reviewers recommend that the HSE builds on its guidance for assessing workplace risks after they found employers often focus solely on physical safety and health. "This should not be the case, and there is no such limitation in the Health and Safety at Work Act," they said.
"Employers should risk assess and manage work-related mental ill-health in the same way as they would work-related physical ill-health. We recommend that the HSE revise its guidance to raise employer awareness of their duty to assess and manage work-related mental ill-health."
Thriving at Work says the HSE should further develop its management standards which identify six areas that can lead to poor health, low productivity and increased accident and sickness rates at work if they are not properly managed. They include demanding workloads, support, relationships, and role conflict.
This approach, however, "encourages employers to take a narrow approach to workplace mental health" because it fails to consider stressors outside of the workplace. The review suggests the "HSE's guidance could provide a more holistic approach".
Among several of the report's recommendations aimed at the government is one calling for it to consider incentives that would encourage SMEs to implement the core standards.
Others include: building an online portal to help employers access the tools and guidance they need; aligning Fit for Work, Access to Work and other NHS services to create an integrated in-work support service; legislative changes to enhance protections for employees with mental health conditions; and making Statutory Sick Pay more flexible to better support those with mental health problems to make voluntary phased returns to work where appropriate.
It has also called on the NHS to extend the responsibility of issuing fit notes beyond GPs to mental health professionals as well.
Paul Farmer said: "We found that in many workplaces, mental health is still a taboo subject and that opportunities are missed to prevent poor mental health and ensure employees who may be struggling get the support they need. In many instances, employers simply don't understand the crucial role they can play, or know where to go for advice and support.
Lord Stevenson added: "We need the right leadership among employers in the public, private and voluntary sectors, and a mandate from policy-makers to deliver our ambitious but achievable plan. It's time for every employer to recognise their responsibilities and affect change, so that the UK becomes a world leader in workplace wellbeing for all staff and in supporting people with mental health problems to thrive at work."
The review draws on an independent study from consultancy firm Deloitte and reports from more than 200 employers. It also features case studies from the likes of Thames Water, the Royal Bank of Scotland, the Environment Agency and Australia's Mentally Healthy Workplace Alliance.
Richard Jones, head of policy and public affairs at IOSH, said: "Employers have a vital role in providing supportive workplaces. It is time for them to step up to the mark on mental health. All work needs to be 'good work' and effective management benefits individuals, businesses and the economy.
"Everyone can contribute to improving mental health at work and supporting people with problems. Health and safety professionals and professional bodies like IOSH are very keen to help organisations to get it right. IOSH provides lots of free guidance and tools on this.
"Action doesn't need to be costly. Where there is cost, the report found that average returns far outweigh it, with around £4.20 for every £1 spent."