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 signed by employers and workers, it’s not tangible. 

At its core, the psychological contract is built on the everyday actions and statements made by one party and how they are perceived and interpreted by the other. 

This factsheet explores the psychological contract within the context of the employment relationship, ways that managers can support the psychological contract and its impact on broader organisation strategy. The factsheet also considers the role of HR in managing the psychological contract.

This factsheet was last updated by Rebecca Peters: Research Adviser, CIPD

Rebecca has a master’s degree in Occupational Psychology from Kingston University, where she conducted research on Prison Officers’ resilience and coping strategies. She joined the CIPD's Research team in 2019, specialising in the area of health and well-being at work as both a practitioner and a researcher. 

Related content

Trade unions: An introduction

An introduction to trade unions and how to work with them effectively

Employee communication

Learn about building an effective internal communication strategy.

Employee relations: an introduction

Understand what employee relations means as a concept and what it means to employers

Bitesize research
Employee relations in the NHS post-pandemic

A look at the positive measures of employee relations in the NHS, and areas for action and improvement

For Members

Explore our other factsheets

Talent management

Understand the changing context and benefits of talent management, and the key features of a talent management strategy

Business partnering

Learn why organisations use business partnering, how it’s implemented and how it can shape successful relationships across the organisation.

HR outsourcing

An overview of HR outsourcing, its use within organisations and its alternatives

Learning theories that impact on design

Learn about the influence of theories on how people learn and the shift away from simplistic learning styles theory