Nature of Employment Relations:

Psychological Contract
 “…the perceptions of the two parties, employee and employer,
of what their mutual obligations are towards each other.” (CIPD,
2016)

 The psychological contract is distinguished from the legal

contract of employment

 The Deal
Employee Employer

Psychological Contract

 Unspoken expectations and demands of the employer and

employee
 Employees want to be treated fairly
 Employees want some level of security and certainty
 Employees have a need for satisfaction, fulfilment and
progression

Traditional
PC : job for life

Transitional phase 1990s:

job security: no longer a deal

The new PC: Fair pay, Treatment,

Delivery of the deal!

Employee Employer

• security of employment • functional, task flexibility

• social relations and sociable atmosphere • potential for • minimum standards of competence • a willingness
advancement to change
• access to training and development • to be treated as a human being
rather than as a commodity • ability to work as a member of a team • commitment
• job satisfaction and empowerment regarding their job to achieving
• family-friendly work–life balance conditions of work organisational objectives
• fair and consistent treatment • capability to take initiative
• some influence over their day-to-day operations but also at a • the talent to give discretionary effort.
policy level (often the term 'voice' is used in this context).
Employees Promise to: Work hard Pay commensurate with performance

Employers Promise to:

Uphold company reputation Opportunities for training and development
Maintain high levels of attendance and punctuality Opportunities for promotion

Show loyalty to the organisation Recognition for innovation or new idea Work extra hours when
required Feedback on performance Develop new skills and update old ones Interesting tasks
Be flexible, for example by taking on a colleague’s work An attractive benefits package

Be courteous to clients and colleagues Respectful treatment Be honest Reasonable job security

Come up with new ideas A pleasant and safe working environment

a negative impact on job satisfaction  a negative impact on the

commitment of the employee
a negative impact on employee engagement.