Understanding employment relationship in Indian organizations through the lens of psychological contracts

Purpose – Most research on employment relationship has been done on the Anglo‐Saxon context, the results of which may not be totally valid for India. The emerging employment relationship in India is best viewed through the lens of psychological contracts. Psychological contract has significant influence on valuable workplace outcomes. This paper seeks to propose a model for understanding employment relationship through the concept of psychological contracts. Design/methodology/approach – With the help of published case studies in the Indian context and based on social exchange theory, this paper proposes a model wherein trust mediates the relationship between the perception of breach of the psychological contract and HR systems. Findings – As more and more employees come under non‐unionized workforce, the non‐formal aspects of employment through the lens of psychological contracts becomes an important lever to manage employment relationships. The model presented in this paper suggests that depending on the HR system an organization adopts, the perception of breach of psychological contract gets affected. Based on the notion of consistency of HR practices, it is argued that HR systems across organizations form two archetypal extremes and each of these give rise to a different perception of breach of psychological contract. Originality/value – As HR managers are faced with a range of choices in implementing HR systems, it becomes difficult to narrow down the available options. This study would provide some guidelines to do so, by highlighting the process through which HR systems impact the perception of breach of psychological contracts and the resulting employment relationship.