When Mental Health Meets Misconduct: Navigating complex situations where wellbeing concerns intersect with behavioural issues

You notice a team member is acting out of character. Deadlines are missed. Mood swings are intensifying. Tension with colleagues is rising. Then a complaint lands on your desk.

You know they’ve been struggling. You also know their behaviour is impacting others — and possibly breaching standards.

Now what?

For many leaders, this is one of the most challenging balancing acts: supporting mental health while upholding expectations.

The Leadership Dilemma

When performance or conduct issues arise alongside mental health concerns, it’s easy to feel paralysed. The fear of “getting it wrong” — legally, ethically, or relationally — can lead to avoidance or overcompensation.

But ignoring the behaviour isn’t protecting the person. It’s often exposing them — and the broader team — to greater risk.

This isn’t a question of choosing compassion or accountability. Great leaders know it must be both.

What’s at Stake

These situations are more common than you might think. And they’re often mishandled because of:

• Confusion about what’s “allowed” under employment laws

• Myths about what mental illness does — or doesn’t — “excuse”

• A lack of training in managing grey areas with confidence

• Well-intentioned leaders over-accommodating at the expense of clarity or others

When handled poorly, the result is costly: team disengagement, psychological risk exposure, legal challenges, and harm to the individual.

But when handled well? These moments can build trust, demonstrate leadership integrity, and protect both wellbeing and workplace culture.

Five Principles for Navigating the Grey

1. Separate diagnosis from behaviour Mental illness may explain behaviour, but it doesn’t excuse harm to others. Behaviour must still be addressed — sensitively, consistently, and clearly.

2. Start with curiosity and support Use language like: “I’ve noticed a few things that seem out of character. Can we talk about what’s going on and how I can support you?” This creates space for disclosure and helps you plan your next steps.

3. Set and hold clear expectations Boundaries are not punitive — they’re protective. Clarity provides safety, especially for someone in distress.

4. Don’t navigate alone Loop in HR, EAP, or legal advisors early. Leaders should never feel like they have to manage these situations solo. Documentation is essential — not to build a case, but to ensure fairness, accuracy, and care.

5. Follow up, not just follow through If adjustments or supports are put in place, monitor them. Check in. Revisit progress. Balance empathy with performance indicators.

Legal Considerations for Australian Workplaces

Under various employment legislation, employers have obligations to manage both mental illness and misconduct fairly and lawfully. Psychological safety is now a key component of WHS responsibilities.

• Leaders must act when they observe risk to others

• But they must also avoid discrimination based on mental illness

Navigating this requires both compassion and procedural fairness.

Reflection for Leaders

What systems or habits do you have in place to address conduct issues without losing sight of wellbeing?

Because when mental illness and misconduct collide, the strongest leaders don’t choose sides. They lead through the complexity — with confidence, care, and clarity.

Managing the intersection of mental illness and misconduct is one of the most complex challenges leaders face. I guide organisations through these moments with compassion, compliance, and clarity. For coaching, training, or strategy support, reach out to consulting@cgw.com.au.

Coming up next in the series: Leading Through Change Without Losing People — Protecting morale and performance during restructures, transitions, or cultural shifts.