Difference Between Employment Contract and Psychological Contract
Psychological contract
is defined as the set of unwritten agreement regarding the expectations between
the employer and employee. There are no formal or written agreements and it is
all based on expectations, assumptions and promises. Psychological contract is
implicit and dynamic. It changes over time as the expectations develops. As mentioned
above psychological contract is implicit and it is not defined in the employment
contract. It is the psychological contract that creates emotions and feeling
which has an influence to control organizational behaviors (Armstrong, 2010). Further,
psychological contract increases engagement, commitment and motivation.
Encourages employees to understand themselves and makes the employees willingly
contribute to the organizational growth (Armstrong, 2008).
On the other hand, employment
contracts are formal aspect of the agreement and has legal influence at all stages. Employment contracts are explicit and formal
agreement which has written agreements and laws related to violation of such
contract.To be precise, Employment contracts are legal contracts and psychological
contracts builds a stable mental model regarding the employment connection. Psychological
contract differs from legal employment contract or written agreements since it
is informal and exists in the mind of the employer and employees. Employment
contract can be defined explicitly. In addition, employment contracts are
explained as ineffective enforcement mechanism, due to the complexity and uncertainty
and they are created to benefit both parties based on their perceptions. But psychological
contract, on the other hand, is considered to be subjective and has no legal binding
with other parties and they are based on employee and employer beliefs and
expectation.
In simple term, expectation
on employment contract are conveyed and specified, explicit and defined but
expectations on psychological contract are unspoken, implicit and imprecise. A
legal contract will never be enough and it requires the support of unwritten promises
for
the success of the organization (Savarimuthu and Rachael, 2017).
References
Armstrong, M (2008) strategic human resource management: a guide to action. 4th ed. London, Kegan Paage.
Armstrong, M. (2010) Armstrong’s essential Human resource management practice: A guide to people management. 1st ed. United States, Kogan Page.
Savarimuthu, A and Rachael,A, J. (2017) Psychological contract - a conceptual framework. International Journal of Management, 8(5), pp.101-108
Adding on, result of a psychological contract, employees are willing to perform well for the organization. They are willing to extend their period of employment on behalf of the organization. Which is one main reason psychological contract is remarkable. This aspect helps to reduce insecurities and behaviors of the employees. However, a relationship between both employer and employee cannot be fully understood and written clearly in black and white, but the gap can be maintained through a psychological contract, as it is a useful mechanism for both work and life. (Essays, 2018)
ReplyDeleteReference
Essays, UK. (2018) Advantages and Disadvantages of Psychological Contract [online]. Available at: .[Accessed on 02 May 2019].