Around 300,000 people with a long-term mental health condition lose their jobs each year, a report has revealed.
The Thriving at Work report commissioned by Theresa May, found that the annual cost to the UK economy has been estimated as up to £99 billion.
The independent review - conducted by Paul Farmer, the chief executive of the mental health charity Mind, and Lord Stevenson, the former chairman of HBOS - also found that people with mental health problems are losing their jobs at double the rate of people without such conditions.
Mr Farmer said they found that in many workplaces mental health is still "a taboo subject" and that opportunities to prevent poor mental health are being missed.
He said: "In many instances employers simply don't understand the crucial role they can play, or know where to go for advice and support.
"The human cost of failing to address mental health in the workplace is clear.
"Every employer in the UK has a responsibility to support employees with mental health problems and promote the mental wellbeing of their entire workforce."
Analysis by Deloitte for the review suggests that mental ill health costs employers up to £42 billion every year.
Half of this is accounted for by so-called presenteeism - when individuals are in work but are less productive due to poor mental health - with additional costs from sickness absence and staff turnover.
The reviewers are calling on all employers, regardless of size or industry, to adopt six "mental health core standards" to enhance workplace mental health.
These include making a mental health at work plan, enhancing awareness among workers, encouraging conversations on the subject and routinely monitoring employee mental health and wellbeing.
Large employers and the public sector have been challenged to go further through external reporting and designated leadership responsibility.
The Government has announced that the NHS and Civil Service, two of the country's largest employers, will abide by the recommendations that apply to them in the report.
This means that more than two million public sector workers will receive tailored in-house mental health support.
Meanwhile, the review made a series of suggestions for Government, including making Statutory Sick Pay more flexible and encouraging the NHS to make sure mental health support was "accessible, high quality and fits around work".
Lord Stevenson said: "It's time for every employer to recognise their responsibilities and affect change, so that the UK becomes a world leader in workplace wellbeing for all staff and in supporting people with mental health problems to thrive at work."
Theresa May said she has made it a priority of this government to "tackle the injustice of mental illness".
"Vital to this is the need to have a comprehensive cross-government plan which transforms how we deal with mental illness not only in our hospitals or crisis centres but in our classrooms, shop floors and communities.
"We need to take action. That's why I am immediately asking NHS England and the Civil Service, which together employ more than two million people, to accept the recommendations that apply to them.
"It is only by making this an everyday concern for everyone that we change the way we see mental illness so that striving to improve your mental health, whether at work or at home, is seen as just as positive as improving our physical wellbeing," she added.