Law at work | 1

Do you know that the offer letter is not the only contract you enter into with your employer? There's another contract called the “psychological contract”, referring to a set of implied terms between employer and employee, and when taken together with the physical contract makes up the total employer-employee relationship. The terms include mutual trust and confidence, as well as such implied expectations by the employee that for all his dedication to his work his employer is to allow some flexibility and provide recognition.


The psychological contract is not enforceable in court (with the exception of the term of mutual trust and confidence - discussed in Part 2) yet it is central to employee engagement at work. When a breach of the psychological contract occurs, employers will typically see negative emotions from the employee such as anger, betrayal, or sadness. There may also be a withdrawal of behaviour e.g. the employee is less willing to work hard, to share ideas, and to be a good work citizen.


In the worst case scenario, the erosion of mutual trust and confidence can lead to a constructive dismissal (CD) claim. Although claims will not always succeed, employers should understand how breaches can arise in order to minimise their exposure to risk

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