Professor Jarrod Haar, from Massey University's School of Management, says the research is the first to explore the emotional crossover process in the workplace.
"You can see how it happens. You're my boss and you come to work and you're low energy and not very interested – that kind of depresses me as somebody working under you," Professor Haar says.
"A simple interpretation would be 'the leader sneezes and the follower catches a cold' – and that's actually a pretty good analogy for how work-related depression spreads in the workplace."
Professor Haar found that 10 per cent of leaders said their job made them feel depressed "much or most of the time". He is quick to point out that this is a self-reported mental state and not depression in the clinical sense.
The same rate of self-reported depression – 10 per cent – was found amongst those working under the team leaders interviewed in the first phase of the study. But the interesting thing was the direct correlation between the depression levels of managers and the teams that they managed.
"We asked employees to rate the effectiveness of their managers and found that those leaders who said they suffered from depression were not rated well by their staff," Professor Haar says.
"We then asked the employees to rate their own levels of depression and this is where the contagion concept comes into play. You find leaders who are depressed have followers who are depressed."
Professor Haar says his research highlights the importance of workplace wellbeing, especially of team leaders.
"Leaders suffering from depression aren't as effective, which is bad, but then their depression and poor performance contributes to the depression of their team members.
"It's a downward spiral that organisations need to be aware of – stressed, unhappy managers are going to affect your bottom line negatively."
The study found that self-aware leaders were able to at least partially mitigate the impact of their mental state on their teams.
"These are the people who can see they are in a rut and do something about it. They understand their staff members still need their attention and energy and what effect they will have on their teams if they constantly appear negative and disinterested," Professor Haar says.
He says that while resliience is a highly sought-after trait when recruiting managers, self-awareness could actually be more desirable
"A level of resilience is important but you also have to look at the organisation itself. If your workplace causes high levels of stress and depression, should you try and recruit people who are resilient enough to survive there, or should you change the organisational culture?
"Organsiations can provide services to help employees – simple things like allowing the ocassional mental health day can actually make a difference. If you can get a team leader over a short-term blip through extra support, the productivity of the whole team will then go up."
Explore further: New survey of US workers reveals two in five survey participants missed work due to depression