Likewise workers whose bosses had low depression were also likely to be happier in the workplace.
Professor Harr said the research showed the importance of workplace wellbeing, particularly for team leaders as their attitude could ultimately impact on an organisation's bottom line.
Possible solutions could be employing leaders who were resilient enough to withstand a stressful workplace or making it a better place to work by offering mental health days where the manager could stay at home or a counselling-type helpline for staff, he said.
"People who are working for a boss who is moody, distracted and grumpy and not doing their job quite so well as they used to, that passes on to the followers who find themselves not working so well either."
For the study, researchers interviewed 179 team leaders and 411 staff across 250 not-for-profit and private organisations. The "depression" was self-reported and not clinically diagnosed.
The research also found this could also have detrimental effects on the manager's performance.
New Zealand Association of Counsellors president Robyn McGill agreed with the research and said if a team member was going to a work environment that was not uplifting and the boss was not communicating well and was negative then it was not going to be a good place to be.
"You're not going to feel like it is worthwhile or that you're appreciated in your workplace as well." She said the best way to address workplace depression was to talk about it with other people and also to reach out to those people.
Randstad general manager Penni Hlaca said the recruitment agency offered a "My Day" to staff four days a year where they were encouraged to take a day off for rest and relaxation to either stay home in their pyjamas, have a sleep in or get their nails done. The idea was to reward staff for hard work. Staff could book it in advance or might be encouraged to take it by their managers.
Bonding and a good barista make for a happy workplace
Staff at Xero's Wellington office don't have to settle for standard instant coffee - they have their own barista on site.
It is just one of the many ways the fast-growing technology company in the capital tried to make the firm a happier place to work, along with more serious processes such as providing an independent phone counselling service and promoting an open door policy.
Xero culture ambassador Natasha Hubbard said the company wanted to reward and retain hardworking employees.
"We try and promote work as more than just a place to work. We do have lots of active sports teams and try and get people involved. By having a flat structure, Rod [Drury, the CEO] being accessible, just celebrating our successes, communicating really openly. I guess all of those fundamentals mean that staff like coming to work and I think then it's easy to spot when someone is unhappy."
Ms Hubbard believed promoting face-to-face communication - albeit via technology such as Facetime or video conferencing - helped improve staff morale. Xero also had Yammer, similar to Facebook but for businesses, which was only accessible to staff and enabled employees to get to know each other or form support groups.
Mr Drury hot-desked so all employees had the chance to raise any concerns or frustrations.
"I agree with the Massey research in terms of if you have someone that's bitter or negative in your work environment it effects other people. What we try to do is spot that ... and then it's about doing something about it," Ms Hubbard said.
