Forced employment contract change and the psychological contract
| Date | 01 September 2006 |
| Published date | 01 September 2006 |
| DOI | https://doi.org/10.1108/01425450610683654 |
| Pages | 449-467 |
| Author | Mark N.K. Saunders,Adrian Thornhill |
| Subject Matter | HR & organizational behaviour |
Forced employment contract
change and the psychological
contract
Mark N.K. Saunders
The Business School, Oxford Brookes University, Wheatley, UK, and
Adrian Thornhill
Gloucestershire Business School, University of Gloucestershire, Cheltenham, UK
Abstract
Purpose – To explore the implications for all employees’ psychological contracts of a forced change
from permanent to temporary employment status for some employees within an organisation.
Design/methodology/approach – A random sample of 30 employees, stratified by employment
status was selected. Each employee undertook a structured card sort of possible emotional responses
to change followed by an in-depth interview to explore and explain their categorisation of these
responses.
Findings – The nature of psychological contracts and organisational attachments for both
permanent employees and forced temporary workers is complex. Permanent employees generally
continue to exhibit relational forms of attachment to the organisation. These, they believe, are
reciprocated by the organisation. Reactions from forced temporary workers are more varied. After a
period of denial, some develop a more calculative approach to their interactions. Others maintain
aspects of their previously developed relational attachments. Only some temporary workers appear to
recognise that their future direction is no longer a concern of the organisation.
Research limitations/implications – Although only based upon one organisation, the findings
suggest that the process of psychological contract adjustment is likely to emerge through gradual
re-interpretation, rather than through re-negotiation.
Practical implications – Management actions need to be recognised as important in re-defining
the nature of psychological contracts. The transitional nature of this process may be prolonged where
management imposes transactional contracts and where communication and negotiation to create
clear expectations is lacking.
Originality/value – The findings provide new insights into the implications of forcing employees
from permanent to temporary contracts for their, and remaining permanent employees’, psychological
contracts.
Keywords Employment contracts, Psychologicalcontracts, Temporary workers
Paper type Research paper
Introduction
In many organisations, the drive to achieve high levels of performance, quality and
output, often linked with espoused policies about securing employees’ commitment to
and integration with business goals (Guest, 1987; Storey, 1992) has been advanced
alongside organisational restructuring, downsizing and employment change.
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/0142-5455.htm
The authors thank the two anonymous reviewers for their constructive comments and
suggestions.
Forced
employment
contract change
449
Received July 2005
Revised November 2005
Accepted November 2005
Employee Relations
Vol. 28 No. 5, 2006
pp. 449-467
qEmerald Group Publishing Limited
0142-5455
DOI 10.1108/01425450610683654
Concurrent with these developments, analysts have noted a long-term but modest
growth in fixed term and temporary employment contracts (Guest, 2004). Estimates
regarding the extent of such flexible contracts vary considerably both between sources
and between countries. For example, according to Eurostat[1], the proportion of
temporary workers as a percentage of total employees in the European Union was
12.5 per cent in 2000, ranging from 32 per cent in Spain through 6.8 per cent in the UK
(United Kingdom) and under 3 per cent in some accession countries. Such flexible
employment practices, it is argued, are part of a longer term trend that commenced in
the early 1950s and has continued throughout the 1990s (Millward et al., 2000; Watson,
1994).
The extent to which organisations have altered their employment practices
deliberately through increased use of temporary workers, including sub contractors
and those on fixed term and temporary contracts, is also open to debate. Research in
general has argued that organisations have not set out deliberately to create an
employment periphery (Millward et al., 2000; Penn, 1992; Pollert, 1988). Rather, the use
of such flexible employment contracts has been in response to sectoral shifts in the
structure of employment and the need to cut costs (Mayne et al., 1996; Mueller, 1992;
Pollert, 1988). Whilst it has been suggested that the majority of organisations have
reacted to these changes by using flexible contracts opportunistically and, perhaps,
reluctantly (Purcell, 2000), it has also been suggested that increases in their use are due
to more fundamental changes in employers’ policies and practices (Casey et al., 1997).
In particular, Guest (2004) argues the CRANET surveys confirm that, across Europe,
managers believe their adoption of fixed term and temporary contracts and the use of
casual workers is increasing. At the same time there are also indications that certain
types of worker actively seek such flexible work (Guest, 2004).
The movement to create organisational flexibility and responsiveness has also been
associated with downsizing, partly through subcontracting those functions no longer
considered core, and partly through delayering and restructuring. Downsizing
inevitably forces those who survive to reconsider their employment relationship with
an organisation. The impact of downsizing upon the relationship between employees
and their employer, and, in particular, on the commitment of those employees who as
permanent employees has been well documented (Brockner and Greenberg, 1990,
Kets De Vries and Balazs, 1997). However, the implications for organisations that, as
part of an organisational restructuring, make employees redundant and then re-employ
them as temporary workers are less well researched. These people are not trad itional
redundant employees covered by studies such as Turnbull and Wass’s (1997) research,
nor are they survivors who remain employees. Rather, they are people who still
undertake work for the organisation, but for whom there has been a forced change in
employment contract. For such people, this process of change in contract appears likely
to impact upon their definition of the content of their psychological contracts (Millward
and Brewerton, 1999).
In this paper, we explore the impact on all employees of introducing temporary
contracts as a forced change in employment status for a group of workers within an
organisation. These workers had previously held permanent contracts but were,
through altered labour market conditions, forced to take temporary contracts. While
these people were contracted for a specific task for a limited but not fully specified
period, their former colleagues maintained their permanent contract status.
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