Stress, depression and mental health problems in the workplace are costing employers millions of pounds in lost productivity, the NHS watchdog says.

A culture of long hours and “presenteeism” — where workers feel obliged to come into work although they may be unproductive — is damaging small businesses and the wider economy, the National Institute for Health and Clinical Excellence (NICE) says.

Analysis by the watchdog suggests that the annual cost of mental ill-health to a business with 1,000 employees is £835,355, but up to £250,000 a year could be saved by reducing absenteeism and increasing performance.

As part of guidance on mental health and wellbeing in the workplace, released today, NICE has produced an online calculator that tells employers how much they could save by improving line management and working conditions. It aims to reduce the estimated 13.7 million working days lost each year because of work-related mental health conditions including stress, depression and anxiety. They are estimated to cost employers more than £28 billion a year at current pay levels.

The NICE guidelines are mandatory for the NHS, the largest single employer in Britain with 1.5 million staff, but would also apply to businesses in all other sectors.

An estimated one in six has suffered from mental health problems at some time, meaning that even small businesses could benefit from measures such as allowing people to work from home or part-time where possible, the authors said.

The report also recommended that line managers improved employees’ mental health by giving constructive feedback that included praise as well as criticism.

Professor Mike Kelly, of NICE, said that the benefits of improving mental wellbeing were clear. “Today’s guidance explains how employers can make simple changes that will improve the management of mental health in the workplace, including prevention and early identification of problems,” he said.