Tag Archives: Psychological Contracts

Psychological Contracts and Disputes

Disputes often arise out of expectations of a relationship which are not fulfilled.

Taking the example of an employment dispute, there are two contracts at play. The physical, signed document containing details of the skills and services that you will provide to your employer in exchange for compensation and benefits.

However, it’s not just a document. You spend most of your time in an office, surrounded by other colleagues and managers. The employment contract is one which is similar to a contract for services but is essentially inter-personal in nature.

Psychological Contracts

These are based on our perceived obligations. It’s not what is written on paper or agreed explicitly but what you believe forms part of the exchange. This may mean that you don’t just believe that your employer has a legal obligation to pay you but you perceive they are morally obliged to take care of you financially if you are taken ill for several months. Or, that they will pay you generously in a redundancy settlement. These are often accompanied with several expectations. Many believe that employers are out to get you, that you can’t trust them and their only concern is the money they make. Others may well expect that they will be treated fairly. It all depends on your world view, the attitudes you have been raised with and the experiences that have formed you as a person.


The problem is, that your perceived obligations and expectations may not be perceived in the same way as the other person in the relationship. Whilst you may believe your employer should acknowledge your hard work with a promotion, your employer may believe you need to participate in after work training sessions to show true commitment. The different perceptions are not often communicated and so the employee may perceive a breach of a psychological contract, even though there is no breach of the written contract.

This could end up as a legal dispute with a huge emotional charge because the employer has not fulfilled the employee’s expectations or obligations. It could just result in a disgruntled employee which can adversely affect the working environment.

The solution

Employers need to explain what they expect from their employees regardless of the legal contract they signed. They also need to explain what employees can expect from them.

Managers should have open conversations (this is where training comes in handy!) about what each expect from the other . If one feels that the other has let them down, there should be enough openness to talk about this.

Don’t shy away from emotion in the work place. It’s everywhere! Shutting it down will only lead to resentment. The trick is to communicate it with words as soon as something feels wrong. Easier said than done, right?

What do you think about this?