Professor Mike Kelly, director public health, NICE: "It's a very serious problem"
Employers need to pay more attention to the levels of stress and anxiety in the workplace, key NHS advisers say.
The National Institute for Health and Clinical Excellence said the cost of work related mental illness was £28bn - a quarter of the UK's total sick bill.
Bad managers were the single biggest cause of problems, the group claimed.
But it said simple steps such as giving positive feedback, allowing flexible working and giving extra days off as a reward could cut the impact by a third.
As well as taking measures like these, NICE urged employers to invest in training for managers and mentoring for staff to help career development.
THE TOLL OF STRESS
Yasmin, 37, from Wokingham in Berkshire, used to be employed by a large financial company as a tax accountant.
Despite having had no previous problems, stress led to her taking nearly four years off work.
Yasmin was prescribed around 30 different anti-depressants before a combination was found that worked for her.
She said: "I lost all sense of self-worth and self-confidence. I felt useless, hopeless and a waste of space."
More than 13 million working days a year are lost because of work related stress, anxiety and depression.
Once the pay of staff, lost productivity and replacing ill employees are taken into account, the cost to employers hits £28.3bn a year.
To convince employers to act, NICE has designed a calculator to show the potential savings of supporting staff more.
It suggests that for the average firm of 1,000 staff, £250,000 a year could be saved.
Professor Cary Cooper, an expert in workplace psychology from Lancaster University who helped draw up the recommendations, said: "You cannot overestimate the importance of saying 'Well done' to staff, but so often it does not happen.
"Managers will tell you when you are doing something wrong, but not when you are doing it right."
But he said the problem was not just to do with staff taking time off.
"Presenteeism, where people come to work but add no value, is if anything more of a problem, especially during a recession.
"People are so scared that they go to work when they are not fit to," said Prof Cooper.
His remarks are supported by a recent survey by the Chartered Institute of Personnel and Development which revealed a quarter of UK workers describe their mental health as moderate or poor, yet nearly all continued to work regularly.
The NICE report said with the right environment work can even be a force for good as it can offer stability, purpose, friendship and distraction.
Dame Carol Black, the government national director for health and work, who produced a report calling on employers to take more of an interest in the health of their workforce last year, welcomed the recommendations.
She said it provided "clear, practical advice to promote mental well-being".
But a spokesman for the Confederation of British Industry said: "The mental health of staff is something firms have been making a priority.
"More and more schemes have been set up to support staff in recent years."
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