THE NATURE OF THE PSYCHOLOGICAL CONTRACT

Apsychological contract is a system of beliefs that may not have been articulated. It encompasses the actions employees believe are expected of them and what response they expect in return from their employer. As described by Guest et al (1996): ‘It is concerned with assumptions, expectations, promises and mutual obligations.’ It creates attitudes and emotions that form and govern behaviour. A psychological contract is implicit. It is also dynamic – it develops over time as experience accumulates, employment conditions change and employees re-evaluate their expectations.

The psychological contract may provide some indication of the answers to the two fundamental employment relationship questions that individuals pose: ‘What can I reasonably expect from the organization?’ and ‘What should I reasonably be expected to contribute in return?’ But it is unlikely that the psychological contract and therefore the employment relationship will ever be fully understood by either party.


The aspects of the employment relationship covered by the psychological contract will include, from the employee’s point of view:

● how they are treated in terms of fairness, equity and consistency; 

● security of employment; 

● scope to demonstrate competence; 

● career expectations and the opportunity to develop skills; 

● involvement and influence; 

● trust in the management of the organization to keep their promises; 

● safe working environment.

From the employer’s point of view, the psychological contract covers such aspects of the employment relationship as:

● competence; 

● effort; 

● compliance; 

● commitment; 

● loyalty. 

As Guest et al (1996) point out:

While employees may want what they have always wanted – security, a career, fair rewards, interesting work and so on – employers no longer feel able or obliged to provide these. Instead, they have been demanding more of their employees in terms of greater input and tolerance of uncertainty and change, while providing less in return, in particular less security and more limited career prospects.

An operational model of the psychological contract 

An operational model of the psychological contract as formulated by Guest et al (1996) suggests that the core of the contract can be measured in terms of fairness of treatment, trust, and the extent to which the explicit deal or contract is perceived to be delivered.