<p>Optimistic work culture practised in any occupation constitutes one of the prime ingredients to promote work productivity. Employees work passionately only if they feel free and enjoy their work. Presence of stress factors can hamper mental or physical wellbeing. External stress like harassment, bullying, discriminating, toxicity among staff, no autonomy to work etc. can reduced a worker’s efficiency. In this study focus was given on analysing the impact of stress factors on workers’ health and ultimately its effect on productivity. For this purpose, primary data collection was done with the sample size of 205 workers from both formal and informal sector of Cuttack and Bhubaneswar. Comparative analysis of both the sectors were done and workers were offered incentive packages for better management and prosperity of their workplace. For that different stress factors have been undertaken to study its impact on work productivity using OLS regression analysis and Ordered Probit model. Analysis of the study for the incentive purpose was done using a game theoretic approach and Probit model has been employed to understand the relationship between harassment and incentive schemes. Findings reveal that factors like satisfaction from income, number of staff, discrimination and type of organisation have significant impact on the work productivity. Even monetary and non-monetary component along with the types of settlement have significant impact on the level of harassment. Also, it has been discovered that among formal and informal sector, informal sector workers are most affected from toxic work environment. Finally, the study goes on to recommend that focus on worker’s awareness and literacy level should be emphasised and existing system need to follow fast and strict jurisdiction for the reducing the stress impact.</p>