Background: Depressive and anxiety disorders affect work functioning and cause high labour costs. Aims: To examine and compare psychopathological characteristics of depressive and anxiety disorders in their effect on work functioning. Method: In 1876 working participants of the Netherlands Study of Depression and Anxiety (NESDA) associations of presence, severity, comorbidity, duration and type of DSM-IV anxiety and depressive disorders with both absenteeism (< 2 weeks and > 2 weeks) and work performance (reduced and impaired) were assessed. Results: People with current depressive disorders had 7.10 times greater odds for the risk of > 2 weeks work-absence and 5.67 greater odds for the risk of impaired work performance, while persons with current anxiety disorders had 1.84 and 2.13 greater odds for the risk of > 2 weeks absence and impaired work performance, respectively. Even when persons were recovered from depressive and anxiety disorders, they still had a higher risk of poor work functioning. Persons with comorbidity, chronic depressive disorder, a generalized anxiety disorder, and more severity of both anxiety and depressive disorder had higher odds for the risk of absenteeism and decreased work performance. Conclusion: Anxiety disorders have significant negative impact on work functioning, although smaller than the effect of depressive disorders. Comorbidity, severity, type and duration of the disorder, differentiate the risk of poor work functioning. © 2010 Elsevier B.V. All rights reserved.