Employers are less likely to promote them, it reveals.
Nearly two-thirds of employers said if they knew an employee had a mental health difficulty they would probably reduce the level of responsibility given.
But despite the risk to their careers, the study found that employees are more likely to tell their employer rather than a colleague that they are suffering from mental ill-health.
The results of the Millward Brown IMS Workplace and Mental Health Surveys and commissioned by the National Economic and Social Forum underline the need for initiatives to improve the employment situation for people recovering from mental ill-health.
The 16% of employees who admitted they had experienced problems in the past two years is also higher than the level of 10% found by the National office of Suicide Prevention and Mental Health Ireland.
The Millward Brown IMS survey found the rate was higher for women, at 19%, and even higher again for 25 to 34-year-olds, at 23%.
Forum chairwoman Dr Maureen Gaffney said work was the best route to recovery from mental ill-health but that one in five people in this category was employed.
“Without work, they are at greater risk of social exclusion. Most of them want to work,” she said.
Despite the growing business case for supporting and retaining experienced staff when they suffer mental ill-health, the research found that just one in five companies have a written policy on the issue.
Ms Gaffney said employers did not feel equipped to deal with mental health difficulties and that employees felt the workplace was an unsafe place to disclose they were suffering from mental ill-health.
All employers who took part in the survey said they would welcome information and guidance.
The survey, based on almost 1,000 telephone interviews and four focus groups, found that while nine out of 10 employers did not want to lose the valuable skills and expertise of employees with a mental illness, more than half thought organisations took a significant risk in employing them.
Asked what problems might arise at work from mental ill-health among employees, almost 40% thought it increased absenteeism, while one in four thought it reduced work capacity.
One in four thought relationships with other colleagues would suffer.
Of those experiencing mental ill-health over the past two years, 57% said it was stress-related. 31% said they suffered from depression and 15% said they had an anxiety disorder.
It also found that 46% of employers reported at least one person with mental ill-health in the workplace in the past two years, as did 43% of employees.