New data reveals worsening physical and mental health is pushing more Kiwi small businesses to seek formal HR support
Small to medium enterprises (SMEs) across Aotearoa are seeking formal help to manage sick or injured staff at nearly two and a half times the rate they were four years ago, according to new data from employment platform MyHR.
Medical incapacity inquiries – cases where an employee's physical or mental health has deteriorated to the point they can no longer perform their role – rose from 2.6 per 1,000 employees in the July–September 2022 quarter to 6.6 per 1,000 employees in the April–June 2026 quarter, an increase of roughly 154 per cent.
Extrapolated across the workforce, MyHR estimates that around 91,500 employees – 3.2 per cent of New Zealand's working population – experienced a health issue serious enough to affect their ability to do their job over the past 12 months.
Retail and manufacturing show the sharpest rise
The increase has not been even across sectors. Retail has seen the rate of inquiries nearly quadruple in a single year, climbing steadily each quarter through to the most recent period. Manufacturing has also moved sharply, up from 0.2 per 1,000 employees to 0.5 – a 150 per cent rise, and five times the rate recorded just a year earlier.
Sylvie Thrush Marsh, chief evangelist at MyHR, says the trend reflects broader strain on employee health rather than any single cause.
"More employees are dealing with complex or prolonged health issues, while cost and access barriers can mean people are putting off seeking care. That can delay recovery and leave both employees and employers dealing with these situations for longer," Thrush Marsh says.
She points to sector-specific pressures in retail, where staff have high levels of public contact and, based on wider industry data, a workforce weighted toward part-time and caregiving-heavy roles. "Retail stands out because we've seen a significant and sustained increase in medical incapacity inquiries over the past year," she says.
A numbers game for small employers
For SMEs, the operational impact of a single prolonged absence is disproportionately large compared with bigger employers who can spread the workload across more staff.
"For SMEs, it really is a numbers game. A larger business may have enough staff to spread the workload when someone is away for several months, but a business with five employees simply does not have the same capacity," Thrush Marsh says. "One person being absent can mean a significant increase in workload for everyone else, which can quickly become difficult to sustain."
That pressure is compounded by the instinct of small business owners to protect close relationships with staff, often extending support well beyond what a larger, more resourced employer might offer – until the operational strain becomes unsustainable.
What employers are asking, and what they need to consider
Thrush Marsh says most employers approach MyHR first wanting to know how to support the affected employee. As an absence extends, the questions shift toward the practical: how long they are required to keep a role open, whether they can bring in temporary cover, and what health information they are entitled to request.
Getting the fundamentals right before a case arises is the clearest way to reduce that pressure. Employment agreements and policies should set out how long a role will be held open, since case law defaults to a starting point of 12 weeks, extending further where ACC is involved.
Employers should also revisit any past commitments made informally – offers of rehabilitation or extended support written into policy years ago can create binding obligations later.
Thrush Marsh says having the conversation about "what if" scenarios at a leadership level, before a case arises, avoids employers having to make high-stakes decisions under pressure.
Reasonable-accommodation obligations under the Health and Safety at Work Act 2015 also mean employers can't treat psychosocial and physical health risk as separate from other workplace hazards – a point reinforced in reporting on how New Zealand employers are being encouraged to build a genuinely open approach to workplace mental health and in analysis of how mental health conditions are increasingly driving income protection claims among New Zealand workers, alongside broader shifts in how sick leave itself is being reconsidered to reflect a wider view of employee wellbeing.
She says better access to primary healthcare would help reduce the length and severity of absences, but in the meantime, SMEs need practical, accessible advice.
"Small business owners are asking how long they need to continue supporting someone, whether they can bring in another employee to cover the role, and what information they are entitled to ask for about an employee's health," she says.
"They want to do the right thing by their people, but they also need to understand their obligations and how to manage the impact on the rest of the business."
