The employment relationships is based on a contract entered into by equal parties but it is in fact a relationship characterised by parties with unequal power’. The work is to be 6 pages with three to five sources, with in-text citations and a reference page. While employment and the process of working for a particular employer may be defined in legal terms with contract documents and legal definitions which try to be as exact as possible, it is the psychological contract between the employer and the employee which is difficult to define and creates the inequality in the relationship. Any company would like to keep individuals working for the company engaged and motivated in their work. However, the process of engaging individuals as well as providing the motivation to all concerned parties is not an easy one (Vance, 2006).
Establishing the psychological contract requires careful management, an understanding of what motivates certain individuals and understanding the work-life balance which prevents employees from burning out (Erdogan, 2005). These responsibilities may be considered as a part of the equation on the side of the employer but then dedication and devotion must also be offered from the employee to create a balanced psychological contract. There are several examples of companies employing effective policies and others where the policies may not be that effective and these can be discussed in the light of theoretical analysis to show how company policies can influence the employment relationship with a view to the psychological contract.
Robinson and Rousseau (1994) suggest that the psychological contract is significant for all sides of the employment contract and those employees who are given employment with the company always hope to obtain more benefits from their employment in future. As per the meaning of the term the psychological contract is the implicit contract of various understandings between the company and the workers as they relate to both the expectations of the employees and the obligations of the employer (Emott, 2006).