The legal contract of employment offers a limited understanding of the employment relationship. However, the psychological contract describes the relationship between employers and workers and influences how people behave from day to day. Unlike the legal contract of employment, the psychological contract is not tangible. It’s built on the everyday actions and statements made by one party and how they are interpreted by the other. 

This factsheet explores the psychological contract in the context of the employment relationship. It covers how managers can support the psychological contract, its impact on broader organisation strategy and the role of HR in managing it.

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