The study objective was to examine the psychological impact of the COVID-19 pandemic on the performance of healthcare employees. The study was informed by a theoretical framework that incorporates different psychological issues (i.e., stress, depression, and anxiety) that influence healthcare workers’ performance through the mediating roles of job burnout and mental health. The study data was gathered through structured questionnaires from 669 participants working in the healthcare sector in Pakistan. A structured equation modeling (SEM) technique was used for data analysis and hypothesis development. It was found that stress, depression, and anxiety positively affected healthcare employees’ job performance during COVID-19. Psychological factors had a positive and significant impact on job burnout and mental health. Job burnout and mental health mediated the relationship between stress, anxiety, depression, and employee performance. The ongoing repercussions of COVID-19 include their impact on employee performance in the healthcare sector. Healthcare worker performance is critical to fostering industrial economic growth. Elevated levels of stress, depression, and anxiety have profoundly exacerbated employee mental health issues. COVID-19 has created challenging working conditions in organizations requiring that they address the growing psychological issues which impact negatively on worker performance.