What does the 'psychological contract' between employer and employee refer to?

The concept of the 'psychological contract' refers to the unwritten set of expectations that exist between an employer and an employee. This includes the mutual beliefs, values, and informal obligations that form the basis of the relationship. Unlike written contracts that lay out explicit job responsibilities or compensation, the psychological contract encompasses broader expectations, such as an employee's perception of job security, career development opportunities, and the work culture, as well as the employer's views on performance and commitment.

This intangible agreement plays a crucial role in influencing workplace behavior and attitudes. For example, if employees feel that their contributions are valued and that they are receiving support for their professional growth, they are likely to be more committed to the organization. Conversely, if employees perceive a breach of this contract—such as promises of advancement not being fulfilled—it can lead to dissatisfaction and disengagement.

The other options refer to more formalized aspects of the employment relationship. A formal agreement outlining job responsibilities is a traditional component of employment contracts, specific to roles and tasks. A document detailing benefits and compensation provides a clear summary of employee entitlements but does not capture the subtle nuances of relational expectations. A negotiation process for salaries and wages refers specifically to financial discussions and outcomes, rather than the broader relational