Psychological Contracts and Employment Relationships (A Review Paper)


  • Faisal Arshad Department of Commerce, University of Karachi
  • Zaeema Asrar Mohiuddin Assistant Professor, Department of Commerce, University of Karachi, Karachi
  • Farooq Ahmed Lecturer, Department of Commerce, Federal Urdu University of Arts, Science & Technology, AH Campus, Karachi
  • Syed Shahid Zaheer Zaidi Assistant Professor, Department of Public Administration, University of Karachi



Management, Employee Relations, Human Resources Management


A psychological contract comprises of a personal viewpoint about mutual commitments in employment relationships. Unlike a traditional service contract, the psychological contract remains unspoken in the employment relationship between employer and the employees. Employees anticipate, for example, working in a secure and clean environment; to work with qualified and regimented co-workers and to be appreciated for their good work, free from harassment etc. Employers, on the contrary, expect staff to be careful and dedicated; to be trustworthy; and to maintain or enhance the organizational image etc. This shady nature and often conflicting nature of psychological contract can often harm the health of employment relationship.This paper explores the nature of psychological contracts and their significance within the domain of employment relationships. The paper first reviews the general theory of psychological contract, its types and factors governing them.  Next, a theoretical examining the research contributions of scholars who have contributed to the literature is being carried out. Finally, the paper thoroughly and critically analyzes the effects of breach or non-conformity of psychological contracts.Psychological contract plays a key role in manipulating workers job related commitment. It must be highlighted that effective observation, agreement and execution of psychological contracts could add to increased levels of workers commitment.Considering the literature studied, it becomes extremely important for the management to be responsive of, and to some degree control, the psychological contracts that the employees may hold. Offering the aggrieved employees a practical psychological contract diminishes the probability that the workforce will see the agreement as void. Increased levels of work independence is also found to reduce incidents of psychological contract breaches.


Aminah Ahmad & Zoharah Omar. (2010). Perceived family-supportive work culture, affective commitment and turnover intention of employees. Journal of American Science, 6(12), 839-846.

Azim, A., Ahmad, A., Omar, Z., & Silong, A. (2012). Work-Family Psychological Contract, Job Autonomy and Organizational Commitment.American Journal Of Applied Sciences, 9(5), 740-747.

Barling, J., Cooper, C. L., & Clegg, S. R. (2008). The Sage handbook of organizational behavior. London: Sage Publications Ltd.

Bellou, V, (2007) Psychological Contract Assessment after a Major Organization Change. Employment Relations, Vol. 29, No 1, 68-88pp.

Chiang, J. C., Chechen, L., Jiang, J., & Klein, G. (2012). CONSEQUENCES OF PSYCHOLOGICAL CONTRACT VIOLATIONS FOR IS PERSONNEL. Journal Of Computer Information Systems, 52(4), 78-87.

Conway, N., Briner, R. B (2005). Understanding Psychological Contracts at Work. Oxford University Press, UK Journal of Organisational Behaviour. Vol 24, 451-471.

Fang, X., Lee, S., and Koh, S. “Transition of knowledge/ skills requirement for entry-level IS professionals: An exploratory study based on recruiters’ perception,” Journal of Computer Information Systems, (46:1), 2005, 58-70.

Gilley, J. W., & Gilley, A. M. (2000). Beyond the learning organization: creating a culture of continuous growth and development through state-of-the-art human resource practices. Cambridge, Mass.: Perseus Books.

Huczynski, A.; Buchanan, D. (2001) Organizational Behaviour: An Introductory Text. Harlow: Pearson Education.

Millward, L. J., and Brewerton, P. M. “Contractors and their psychological contracts,” British Journal of Management, (10:3), 1999, 253-274.

Morrison, E. W., and Robinson, S. L. “When employees feel betrayed: A model of how psychological contract violation develops,” Academy of Management Review, (22:1), 1997, 226-256.

Mubin, Muhammad and Vohra, Mohsin and Ijaz, Shafqat and Rafique, Mehwish and Hassan, Taimoor, Cultural Mapping and Its Ascertainment: A Case Study of PTCL (April 24, 2013). European Journal of Business and Management , Vol. 6, No.14, 2014 . Available at SSRN:

Mullins, L. (2002) Management and Organizational Behaviour. London: Pitman Financial Times.

Psychological contract. (2005). In International Encyclopedia of Hospitality Management. Retrieved from

"PSYCHOLOGICAL CONTRACT." Encyclopedia of Health Care Management, Sage. Thousand Oaks: Sage Publications, 2004. Credo Reference. 6 Oct. 2005. Web. 26 Dec. 2012. <>.

Raja, U., Johns, G., and Ntalianis, F. “The impact of personality on psychological contracts,” Academy of Management Journal, (47:3), 2004, 350-367.

Restubog, S. L., Bordia, P., and Tang, R. L. “Effects of psychological contract breach on performance of IT employees: The mediating role of affective commitment,” Journal of Occupational and Organizational Psychology (79:2), 2007, 299-306.

Restubog, S., Bordia, P., & Bordia, S. (2009). The Interactive Effects of Procedural Justice and Equity Sensitivity in Predicting Responses to Psychological Contract Breach: An Interactionist Perspective. Journal Of Business & Psychology,24(2), 165-178. doi:10.1007/s10869-009-9097.

Rousseau, D. M. Psychological contracts in organizations: Understanding written and unwritten agreements, Sage, Thousand Oaks, CA, 1995

Scott, W. L., William, H. T., James, M. B., & Mark, C. B. (2002). Not seeing eye to eye: Differences in supervisor and subordinate perceptions of and attributions for psychological contract breach. Journal of Organizational Behavior, 23(1), 39-56. Retrieved from

Shore, L. M., and Tetrick, L. E. “The psychological contract as an explanatory framework in the employment relationship,” in C. L. Cooper, and D. M. Rousseau (Eds.),

Smithson, J. and Stokoe, E.H. (2005), Discourses of work-life balance: Negotiating “genderblind” terms in organisations. Gender, Work and Organization. 12/2: 147-168.

Smithson, J., Lewis, S., Cooper, C. and Dyer, J. (2004). Flexible working and the gender pay gap in the accountancy profession. Work, Employment and Society 18/1: 115-135.

Sparrow, P. R., and Cooper, C. L. The employment relationship: Key challenges for HR, Butterworth- Heinemann, Oxford, UK, 2003.

Sullivan, C. and Smithson, J. (2007), Perspectives of homeworkers and their partners on working flexibility and gender equity. International Journal of Human Resource Management. 18/3 March 2007

Thomas, D., Au, K., Ravlin, R. (2003). Cultural variation and the psychological.




How to Cite

Arshad, F., Mohiuddin, Z. A., Ahmed, F., & Zaidi, S. S. Z. (2017). Psychological Contracts and Employment Relationships (A Review Paper). Archives of Business Research, 5(10).