The psychological contract does not exist in the minds of employers in Essay

The psychological contract does not exist in the minds of employers in mature states and mature organisations. What is key is the legal contract. The psycholog - Essay Example ent the employer may promise to offer something to the employee or at the time of appraising an employee’s performance the employer could declare a reward for his satisfactory performance. Mutual obligations sometimes act as promises and sometimes as expectations. However, the employee is required to have trust in such promises or expectations as part of the relationship with the employer (The psychological contract, 2007). There is a vast difference between a legal contract and a psychological contract with regard to employment. Legal contracts offer a limited set of expectations and imperfect identification of the relationship involved in the employment. With the exception of refusing to accept such terms and conditions, the employee can do anything about the relationship mentioned in legal contracts. The courts and employment tribunals examine the nature and content of the legal contract of employment. These enforcing bodies interpret the nature of employment on the basis of the legal contract (The psychological contract, 2007). A psychological contract examines the practicality and reality of the work place environment as perceived by the employer and the employees. It has greater effect than a legal contract in determining the activities of the employees and the management. Under a psychological contract, the employees have a clear idea of their duties and the necessity to discuss them by adopting the process of collective bargaining. It also explains to them their expectations from the employer (The psychological contract, 2007). A psychological contract does not require to be enforced strictly. The courts examine the underlying relationship between employer and employee while interpreting the common law principles with regard to mutual trust and confidence. Researchers claim that there would be a negative effect on job satisfaction and a deterioration of employee commitment towards their job, if the management fails to fulfill its promises to its