Psychological Contract Breach and Its Implications on Employee Attitude and Behavioural Job Outcomes

Institutional Affiliation(S)
bachelor of business

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Introduction
The psychological contract is a significant aspect of employment relationship as it
imperceptibly binds employee and the employer through set of expectations ( Paillé, et al.,
2016). For an individual of an organisation, the psychological contract refers to those
elements that affects the level of commitment, morale and motivation in them.
Furthermore, positive psychological contract aids in boosting organisational productivity
and employee performance also. Nevertheless, expectations cannot be identified easily on
both employers as well as employee perspective that often arises breaches from any one or
both the parties (Ballou, 2013). It can be noted here that psychological contracts possess
unwritten and unspoken elements and thus it can be recommended that employees’
expectation, in any foreign context which they plan to engage, shall be documented to avoid
further discrepancy. The implication of psychological contract breach will be further
discussed in this paper along with psychological contracts examples and different types of
breaches with the help of academic literature found in journal articles and books.
According to Antonaki & Trivellas (2014), “Psychological contract has been regarded
as an important framework for “shedding light” on the employment relationship” (p. 355).
Therefore, to gain loyalty and commitment of individual employees, putting them at
appropriate places becomes significant for organisations to foster identification of individual
expectations and methods to fulfil them. The literature related to psychological contract
have expanded remarkably in past few years under the influence of researchers and
authors. However, Cullinane & Dundon (2006) argues that the concept of psychological
contract has much deeper and longer pedigree with its background events as mentioned in
previous works on social exchange theory. According to the authors, previous works and
literature illustrates significant points that demonstrates employment relationship shaped
by social and economic exchange. Psychological contract concept was developed later after
envisaging series of mutual demands and expectations in which the parties related to
employment relationship may not be aware of there presence but nonetheless governs
interrelationships with each other’s ( Rousseau, et al., 2013). Therefore, a more précised
definition of psychological contract was developed in contemporary organisations where it
is defined as the perceptions of employees and employers imprecise and informal mutual
obligations towards each other.

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Transactional, relational, transitional and balanced are four distinct types of
psychological contracts ( Savarimuthu & Rachael, 2017). Transactional contracts specify
mainly monetary terms exchange with specific performance rapports. Relational, on the
other hand refers to imprecise and long-term contracts that not only involves financial
rewards, but also social and emotional exchanges that are based on loyalty, trust and
respect. Transitional contracts, as the name states, is passing phase between two parties’
relationships where they reflect the absence of commitments. Under such contracts,
although psychological contract may not be formed, but a cognitive statement is developed
that reflects consequences of organisational transitions and change that brings odds with
previously formed employment arrangements (Ballou, 2013). Balanced contract is also
mentioned in literature where transactional and relational dynamic dimensions along with
open-ended employment arrangements are managed. In such contracts, worker
opportunities, economic success to develop organisations as well as career advantages are
envisaged ( Rousseau, et al., 2013).
Psychological contract reflects employees’ expectations and that there is mutual
obligation between organisations and employees. What happens when any of these
contracts expectations does not get fulfilled? Based on contemporary workplace
environment and several studies, psychological contract breach implications show that
when workplace do not meet employees’ expectations, employees remain less gratified
with their work. Thus, it can be said that psychological contract breach puts negative impact
on employee’s performance which makes necessary to understand how breach in
psychological contracts can affect employees under different situations. According to
Gakovic & Tetrick (2003), psychological contract breach can be defined as employee’s
perception that organisation has failed to fulfil. There may be one or more commitments
associated with professed mutual promises that has not been fulfilled which creates
perception of breach in contract in the judgements of employees. For example, if an
employee worked hard for years along with staying loyal to the company, he would receive
Christmas bonus or cash that allows him/her to fulfil exceptional needs. However, if the
bonus, which is highly anticipated is not received by the employee, he/she may become
highly upset and even lose composure that further manifests into anti-social behaviours due
to breach of psychological contract.