RESEARCH AND PRACTICE
IN HUMAN RESOURCE MANAGEMENT

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Nelson, L. & Tonks, G. (2007). Violations of the Psychological Contract: Experiences of a Group of Casual Workers, Research and Practice in Human Resource Management, 15(1), 22-36.

Violations of the Psychological Contract: Experiences of a Group of Casual Workers

Lindsay Nelson & Graeme Tonks

Abstract

The escalating casualisation of the Australian workforce appears to be accompanied by increasing worker resentment of the employment relationship. This paper examines the extent of psychological contract violations perceived by casual workers. It follows an earlier paper in this journal which revealed that casual workers experience low job satisfaction and that needs from the relational contract were not being met. That research also suggested that psychological contracts were being violated to the point where workers developed negative dispositions towards managers and their organisations. This paper extends the previous work by investigating the perceptions of a larger sample of casual workers. Results confirm the earlier research, and more significantly reveal, that violations were perceived across most of the investigated work dimensions.

Introduction

During the last two decades the number of people reported by the Australian Bureau of Statistics as working under ‘casual’ employment relationships trebled to 2.1 million, with the proportion to all workers doubling, to 26.4 per cent (Burgess & Mitchell 2001). It is predicted, that if current trends continue, one in three Australian workers will be employed casually by 2010. The demographic most affected by this shift in the labour market is people in the 15 to 19 year age group, where casual employment has risen from 38 per cent in 1988 to 66 per cent in 2001 (Watson, Buchanan, Campbell & Briggs 2003).

Research into the changing nature of the Australian employment landscape has attributed the increasing casualisation to a combination of political and economic factors, as well as specific employer strategies designed to improve competitive advantage by curbing labour costs and mitigating market uncertainty (Dawkins & Norris 1990, Walsh 1997, Campbell & Brosnan 1999, Standing 1999, Campbell & Burgess 2001, Hepworth & Murphy 2001, Watson, et al. 2003). Compared with permanent workers, casual workers have substandard rights, benefits and protection, plus substantial levels of precarious employment (Campbell 2000). Traditionally, casual pay rates included a loading intended, but not necessarily acting, as insulation against employer exploitation (Campbell 1996, Campbell & Burgess 1997), however, these financial conditions may be further eroded in Australia’s new industrial relations environment (CCH 2006). Casual workers, therefore, are a significant, but disadvantaged proportion of workers in Australia who only have a fragile hold on their employment.

At the same time, employers seek a motivated, committed workforce, willing to display loyalty and enthusiasm in their duties. Indeed, the management literature has long reflected these issues (see for example, Herzberg 1966, Allen & Meyer 1990, Coopey & Hartley 1991, Hiltrop 1996). Whilst these issues may well concern many employers, their casual employees may not feel responsive to such desires. The focus of this study, therefore, centres on the perceptions and attitudes of casual workers with respect to their employment situation. An appropriate model for the investigation is the psychological contract (Rousseau 1995), by which means the feelings of employees can be measured. Of particular interest in the present context are those casual employees who are pursuing tertiary level studies.

The first stage of the research, which was reported in Research and Practice in Human Resource Management, 2006, (Volume 14, Issue 2), evaluated a small group (n = 20) of casual employees using measures instituted by Millward and Hopkins (1998), and O’Brien, Dowling and Kabanoff (1978), together with semi-structured interviews. This earlier study revealed that casually employed university students regarded their employment relationship as essentially short term and based on transactional aspects of the psychological contract. This finding was not surprising given that students generally work only to meet their financial commitments whilst studying. However, the majority of the participants also felt that their relational expectations of employers were being unmet.

The objective of the present investigation is to extend the previous study. In the study reported in this paper a larger group of casual employees was examined specifically by using the Coyle-Shapiro and Kessler (2000) scale to assess and pinpoint perceived violations of the psychological contract. Both the transactional and the relational aspects of the psychological contract, that are likely to be of concern to these employees, are investigated.

Psychological Contract

Traditionally, the moral dimension to work has been associated with characteristics such as commitment, diligence, obedience and duty; generally embraced by the term ‘work ethic’ (Noon & Blyton 2002). It might be expected that the work ethic is even more important today due to globalisation, competition and industrial relations reforms both in Australia and other countries of the developed world. Nevertheless, despite these factors, together with work intensification and less job security, employees feel that their expectations from the job are no longer being met in an age of greater employability and mobility, which has contributed to considerations related to the psychological contract (Watson, et al. 2003).

The notion of a psychological contract in work has lineage in the contemporary literature. Indeed, the origins of the psychological contract may be traced back to the work of Argyris (1960). More recently it has emerged the concept can be useful in explaining the feelings of employees towards their work, and thus, the construct may be used to analyse the impact employment changes can have on individuals (Guest 2001). A relatively large body of research has recently appeared (for example, Herriot & Pemberton 1995, Rousseau 1995, Guest 1998, Rousseau & Schalk 2000), and although the psychological contract has been variously defined, there is a useful definition given by Robinson and Rousseau (1994: 246).

An individual’s belief regarding the terms and conditions of a reciprocal exchange agreement between that focal person and another party … a belief that some form of a promise has been made and that the terms and conditions of the contract have been accepted by both parties.

Based on an individual’s perception that an employer has agreed to certain obligations in return for an employee’s contributions to the organisation (Turnley & Feldman 2000), the psychological contract is an unique and subjective set of beliefs, implying that aspects of the employment relationship go beyond the terms set in formal agreements (Anderson & Schalk 1998, Rousseau & Schalk 2000).

A distinction can be made between two types of contracts: relational and transactional (Robinson, Kraatz & Rousseau 1994, Robinson & Rousseau 1994, Rousseau & Wade-Benzoni 1995, Herriot, Manning & Kidd 1997, Stiles, Gratton, Truss, Hope-Hailey & McGovern 1997, Anderson & Schalk 1998, Cavanaugh & Noe 1999). On the one hand, a relational contract refers more to the traditional expectations that workers have, such as a long term relationship based on mutual respect and trust. But on the other hand, there is emerging a transactional form of the contract, which is more like a short term economic contract. In practice this workplace dimension translates into a short term, closed ended focus on material rewards in return for well defined employee contributions to the organisation (Rousseau & McLean Parks 1993, Millward & Hopkins 1998, Aselage & Eisenberger 2003). Robinson, et al. (1994), and Millward and Hopkins (1998) take the position that the transactional and relational aspects are inversely correlated; that is, “… the higher the relational orientation, the lower the transactional orientation, and vice versa.” (Millward & Hopkins 1998: 1546).

The non-realisation of work expectations may be perceived as a lack of fulfilment of the psychological contract. Employees regard the psychological contract to be breached when there is a perception “… that one’s organization has failed to fulfil one or more obligations composing one’s psychological contract.” (Morrison & Robinson 1997: 230), and for a breach to occur, an individual must elicit an affective response to this perceived violation. Morrison and Robinson (1997) further suggest that there are two causes of psychological contract violations: (i) reneging (when the employer deliberately breaks a promise, either purposely or due to unforeseen circumstances), and (ii) incongruence (when the employee and employer have divergent perceptions regarding what has been promised). Robinson, et al. (1994) found that psychological contracts become more transactional following violation, showing that employees retreat from social exchange aspects and focus on pecuniary benefits in order to create a psychological distance from the source of violation (McLean Parks & Kidder 1994).

Research indicates that the shift to a transactional contract results in changes in employee attitudes and behaviours. For instance, Deery, Walsh and Knox (2001) provide evidence that changes in the Australian employment landscape, including casualisation, are not dissimilar to Sisson’s (1993) ‘bleak house’ scenario in the UK. In a similar vein, Kabanoff, Jimmieson and Lewis (2000) have observed a movement by Australian employers towards transactional orientations in employment relationships. Because casual workers are widely considered to be disadvantaged (Campbell 2000), they are likely to have a short term focus on pecuniary benefits. This is supported by Rousseau and Wade-Benzoni (1995), McLean Parks, Kidder and Gallagher (1998), Millward and Hopkins (1998), and Gakovic and Tetrick (2003). Campbell (2000) suggests that future research on casualisation requires more emphasis on its effects on individual employees, and notes that a “… sensitive exploration of … employee preferences and attitudes would help in teasing out these specific effects …” (2000: 93). To develop this latter point, an investigation was undertaken in connection with the work experiences and perceptions of the psychological contract among a group of casual employees. University students provide a large pool of labour for casual work and it was from this group that participants for the studies were drawn. In particular, the present study focussed on their feelings about whether the psychological contract had been breached; in other words, violated.

Methodology

Participants and Site

Participants in this study were university students undertaking undergraduate studies in management. They comprised all of the 313 students in a second year class from a three year degree course in a commerce/business programme. Of this number a total of 224 students, or 71 per cent, were in casual employment. Throughout Australia approximately 650,000 students are undertaking a degree at university (ABS 2004), and if this feature is extrapolated from the sample in the present study, it can be conservatively estimated that something to the order of over 400,000 university students are in casual employment in Australia. Most of the respondents were employed in the service sector, predominantly in areas of hospitality and retail.

It is acknowledged that this study sample does not represent a cross section of the estimated 2,000,000 Australians in casual employment (ABS 2006). Notwithstanding, with 69 per cent of respondents under 25 years of age (refer Table 1), the sample embodies characteristics which provide insight into the perceptions of a significant cohort of the wider population of casual workers, who have been identified as generation Y. Specifically, generation Y employees frequently report different expectations of commitment and loyalty when compared to older workers (Morgan & Banks 2000, Baruch 2004, Donaldson 2005, Sheahan 2005).

Procedure

Prior to conducting the research session students were briefed on the purpose of the study and given the opportunity to ask questions. It was previously agreed by the researchers that anyone objecting to the survey would be permitted to leave; however, there were no objections. A number of participants said later that they were pleased at having the opportunity to express their views on their employment situation. The survey questionnaires were administered during a normal class, with provision being made on the cover sheet for basic demographic information: whether in casual employment or not, age range, sex and type of job. The questionnaires took about ten minutes to complete, but no time limit was prescribed. At the conclusion of this research session the questionnaires were returned to the lecturer and respondents left the room.

Measures

Assessment of the Psychological Contract

The survey instrument was based on the work of Coyle-Shapiro and Kessler (2000). The factors investigated by this questionnaire are shown in Appendix 1 and Appendix 2. These two documents are framed around a set of job related factors that reflect a mixture of both transactional and relational aspects of the work as the purpose of the study was not so much to tease out such a dichotomy as to investigate perceptions of contract violations. This stage of the research, therefore, examined psychological contract violations by comparing what casual employees considered they were owed by employers with the extent to which employers were considered to be meeting those expectations. Because the psychological contract is an individual employee’s unique and subjective perspective of the employment relationship (Guzzo & Noonan 1994, Rousseau 1995), this research is unable to reveal what the employers actually give; only the perceptions of the employees are available.

Participants reported violations that were measured across two categories. The first category, that was assessed, was the extent to which respondents perceived certain job features were ‘owed’ to them by the employer. In practice respondents reported to the principal question of “What do you think your employer owes you?” Responses were given to the statement “I believe my employer owes me” across 15 job related facets. Each of these 15 items was reported on a five point scale (1 = not at all to 5 = to a very great extent), that also had a neutral response point (not sure/not applicable). The scale for assessing the extent to which job incumbents perceived was (expected) ‘owed’ to them is presented as Appendix 1.

The second assessment category was the perception of how well these 15 job facets (of Appendix 1) were provided by the employer. Respondents addressed the principal question of “How well your employer provides what they owe you” on a five point scale (1 = not at all fulfilled to 5 = very well fulfilled), that also had a neutral response point (not owed). The scale is presented as Appendix 2.

Analysis

Data from the Coyle-Shapiro and Kessler (2000) questionnaire were evaluated by means, standard deviations, the Wilcoxon signed ranks test, and tests of significance. Analyses were performed using SPSS software.

Results

Table 1 depicts the demographic makeup of the respondents. Of the 313 students surveyed, almost 70 per cent were under 25 years of age, with 25 years of age being the upper limit of being a ‘young’ person according to the ABS (2006). This figure would appear to support the assertion of Watson, et al. (2003) that about two thirds of younger people are working on a casual basis. The data were not analysed according to age group because of the relative small number being over 25 years old, and such analysis did not fit with the primary purpose of this investigation.

Table 1
Demographics of Survey Population % (N = 313)
Gender
Male55
Female45
Age (years)
Under 2569.7
25 to 3423.0
Over 347.3
Work Type
Employed in casual work71.6
Employed full time or not in work28.4

The results from administering the questionnaire, which was adapted from Coyle-Shapiro and Kessler (2000), are displayed in Table 2 in three main blocks. In the left hand block of Table 2 is depicted the assessed 15 job facets, which are then partitioned into the two categories of ‘owes’ and ‘provides’. The number of responses for each of these two categories (shown in the N field), and the perceived mean score as well as the standard deviation of the means completes the left hand block of Table 2. The central block of Table 2 shows analysis of the responses in terms of the Wilcoxon signed ranks. This test is a method of nonparametric analysis, which evaluates positive and negative differences between the means, with the added feature of not assuming the data are from a normally distributed population. Thus, a strength of the Wilcoxon test is the robustness of findings in comparison to results from the more common means t test procedure. In the third block of Table 2 is given the results of tests of significance for perceptual responses to the categories of ‘owes’ and ‘provides’. Thus, this is a strength of the Wilcoxon test, which provides robust findings in comparison to the more common means t test. A salient feature of Table 2 is only the job facet of security had non significant differences between the scores of ‘owes’ and ‘provides’.

Of particular interest (of the content of Table 2) is the extent to which there was divergence between what employees believed their employers owed them and the extent to which employers provided what was perceptually owed. Means over the neutral point of three indicate high expectations of what employers were considered to owe their employees. It can be seen that the highest expectations were held for fair pay, training, sharing information, fair pay for responsibilities and having enough resources. At the other extreme, high expectations were not held in respect of job security. However, in terms of what employers provided, it was perceived that they failed to meet a number of expectations and the means are noticeably lower. Expectations remained somewhat unfulfilled; with the means for prospects, training, involvement in decisions and pay increases all below the neutral point. The Wilcoxon signed ranks test for the items surveyed are also displayed. The mean ranks illustrate this observation even more starkly. The Wilcoxon tests of significance show, that with the exception of job security, all are significant. The differences between provides/owes are very high in respect of training and development, involvement in decisions, training to do a good job, information sharing and having enough resources to do the job (Z, shown in Table 2, is a test statistic generated automatically by SPSS for the Wilcoxon signed ranks test).

Table 2
Descriptive Statistics and Wilcoxon Signed Ranks Test for Psychological Contract Violationsa
Item Descriptive Statistics Wilcoxon Signed Ranks Wilcoxon Tests of Significance
Provides/Owes N Mean Std Ranks/Ties/Total N Mean Rank Sum of Ranks Z Asymp. Sig (2 tailed)
Security Provides2153.101.011Negative5561.963408.00Provides/Owes -0.290b0.772
Owes2203.040.898Positive6357.353613.00
Ties94
Total212
Prospects Provides2172.881.043Negative8971.976405.50Provides/Owes -3.574c0.000
Owes2203.170.973Positive4965.013685.50
Ties76
Total214
Interesting work Provides2213.001.038Negative10078.607860.00Provides/Owes -5.026c0.000
Owes2193.490.988Positive4662.412871.00
Ties71
Total217
Training & development Provides2222.951.054Negative13788.8512172.00Provides/Owes -8.651c0.000
Owes2223.870.996Positive2958.241689.00
Ties54
Total220
Job freedom Provides2233.380.959Negative11680.059286.00Provides/Owes -6.642c0.000
Owes2233.960.909Positive3665.062342.00
Ties70
Total222
Decisions Provides2242.961.066Negative13587.1111760.00Provides/Owes -8.814c0.000
Owes2223.910.939Positive2753.441443.00
Ties60
Total222
Pay increases Provides2162.901.059Negative10379.088145.50Provides/Owes -5.583c0.000
Owes2213.441.063Positive4360.132585.50
Ties76
Total214
Fair pay Provides2233.361.089Negative11484.519634.00Provides/Owes -6.985c0.000
Owes2204.070.912Positive3955.052147.00
Ties66
Total219
Training to do a good job Provides2233.021.061Negative14890.9213456.50Provides/Owes -9.368c0.000
Owes2214.110.930Positive2459.231421.50
Ties48
Total220
Support for new skills Provides2213.001.138Negative11781.569542.00Provides/Owes -7.445c0.000
Owes2233.750.919Positive3654.031783.00
Ties70
Total220
Information Provides2233.040.958Negative13782.1511254.50Provides/Owes -9.265c0.000
Owes2204.030.864Positive1952.18991.50
Ties63
Total219
Pay for responsibilities Provides2233.211.016Negative12683.8910570.50Provides/Owes -7.876c0.000
Owes2194.040.858Positive3159.111832.50
Ties61
Total218
Fringe benefits Provides2073.001.026Negative10872.457825.00Provides/Owes -7.285c0.000
Owes2173.710.994Positive2750.191355.00
Ties66
Total201
Address customer needs Provides2223.231.058Negative10673.177755.50Provides/Owes -6.279c0.000
Owes2203.800.913Positive3359.831974.50
Ties80
Total219
Resources Provides2223.261.004Negative12175.029078.00Provides/Owes -8.610c0.000
Owes2224.070.826Positive2046.65933.00
Ties81
Total222

Notes:
a. Total number of respondents in the survey, not all employed as casuals.
b. Based on negative ranks.
c. Based on positive ranks.
d. N = number of respondents, std = standard deviation of the means.

Discussion

Item by item, the results contain an instructive set of data. It seems clear from the results presented that all, but one factor – job security – are regarded as violations of the psychological contract. Overall, this indicates that these casual employees feel disgruntled with their employment circumstances. This was unexpected, due to the fact that the group was taken from a population of students who in reality would not view their temporary jobs as permanent fixtures.

The equivocal finding with respect to job security may be explained either as not being a very critical matter to this group of casual workers or, perhaps, this is not an issue of great importance given the current labour market where no job is considered safe. Job mobility and employability for some little time have been more to the fore rather than permanent tenure as such (Guest, Conway, Briner & Dickman 1996). Even so, there is a suggestion that casuals look to the future when the factor of career prospects is considered; this was supported by the strong evidence that the twin issues of training and development and training to do a good job are viewed as important. It appears clear, therefore, that the respondents regard job related training as a critical factor. Although training has implications for the present, development carries with it ideas and desires that are forward looking, possibly involving plans for the future. It is not so clear whether development, in so far as projecting employee thoughts into the future is a valid conclusion, especially when linked to the factor of support for learning new skills, which received less support, albeit only slightly, than other training matters. Training issues were generally perceived as highly relevant in terms of the contract, suggesting that even casual jobs are not necessarily viewed as ends in themselves. For these reasons it seems obvious that specific training in order to do a good job – where the focus is on the present – rates very highly with the respondents and is clearly viewed as having a great impact on the psychological contract.

Remuneration matters – fair pay, pay increases and fringe benefits – are not seen as major violations of the contract, indicating that these more transactional factors are interpreted as being reasonable. This may be attributed to the fact that students intending to pursue professional careers at significantly higher pay levels are unlikely to consider their present compensation as a crucial issue. On the other hand, they evidently perceived that pay did not accord with the level of responsibilities embraced by the work. This could be due to students having a poor appreciation and understanding of the realities found in modern work practices, given issues of flexibility and work intensification (Watson, et al. 2003). Although speculative, it is possible that even though pay issues are no doubt market based, there is still a degree of employees feeling exploited.

With respect to having interesting work, it was anticipated that employees could display strong feelings of contract violation. As it transpires, however, the respondents of this study did not hold strong expectations that the work would be intellectually interesting or motivating. A casual job whilst at the same time studying is, perhaps, seen as only providing temporary financial income without needing to be embarking on a meaningful career. Somewhat similarly, job freedom is not seen as a dramatic violation of the contract, notwithstanding its statistical significance. Here again, it may be that this group of casual workers do not have high expectations of job freedom, especially should the work be at a relatively low organisational level. Linked to this is the ‘opportunity to address customer needs’; both dimensions were similar with the means and Wilcoxon tests yielding comparable results. As with ‘interesting work’ and ‘job freedom’, it may be that individual expectations for autonomy may not be high.

Respondents felt ‘let down’ in the areas of involvement in decisions, information on important developments and resources to deliver a service. If it is assumed that this group of casual workers do not enjoy elevated positions in the organisational hierarchy, it could be conjectured that issues of involvement and communication should not be a source of contract violations. The findings strongly suggest, however, that this is not the case. On the contrary, both these issues are perceived as highly important. In addition, not having sufficient resources to deliver a service to customers is also a source of tension. Even though casual workers may be seen by management as having little need for involvement, communication or resources, this opinion is not shared by the group of participants in this survey.

Conclusion

This research supports and amplifies results of the previous study into the nature of psychological contracts among casual workers insofar as many of the violations were of a relational nature and not confined to the transactional dimension. In an age where casual employment is escalating, it is important for employers to treat casual workers on ‘an equal footing’ with full time and permanent staff. Employees expected far more assistance and help from management in respect of training generally, followed by a strong desire for better communication, involvement in decisions and resources in order to fulfill their duties. These matters would probably not be regarded as important by most managers responsible for employing casual workers who, by definition, are hardly likely to become part of the employee mainstream. Whilst it could be that organisations pay little attention to casual workers simply because they work intermittently, it seems more likely that this group is seen as expendable, itinerant workers.

Although the study findings reflect the perceptions of a population of casual workers who happen to be university students, their reaction to the management of their employment relationships probably differs little from the wider population of casuals except, maybe, in issues concerning job security. In other words, even allowing for the fact that students may be considered to be more transient than many other employee groups, their feelings of resentment most likely hold for a large proportion of casual workers.

The principal conclusion from this study, therefore, is that managers should not treat casual workers as second-class employees even though they may be employed on a discontinuous basis. Whilst, as a group, casuals have a high turnover, are regarded by many employers as unreliable and are drawn from a large pool of available labour, individually they seek reciprocation with respect to the psychological contract.

Authors

Lindsay Nelson BA (Hons), MSc, PhD was a Senior Lecturer with the School of Management, based at the University of Tasmania’s Hobart campus. He has extensive Human Resource Management and Employee Relations experience in the public and private sector, and taught in the HRM and Organisational Behaviour areas. Dr Nelson’s research interests include organisational change, workplace change, and occupational health and safety.

Email: lindsay.nelson@iinet.net.au

Graeme Tonks BBus, MEd, PhD is a Lecturer with the School of Management, based at the University of Tasmania’s Launceston campus. Prior to entering academe, he held management positions in the finance industry. He teaches in the HRM, Organisational Behaviour, and International Business areas. Dr Tonks’ research interests include management in developing economies, management education, and human resource management.

Email: graeme.tonks@utas.edu.au

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Appendices

Appendix 1
What do you think your employer owes you?
I believe my employer owes me ...
Item/Response A B C D E F
Long-term job securityoooooo
Good career prospectsoooooo
The opportunity to do interesting workoooooo
Up to date training and developmentoooooo
The freedom to do my job welloooooo
The opportunity to be involved in decisions that affect meoooooo
Pay increases to maintain my standard of livingoooooo
Fair pay compared to employees doing similar work in other organisationsoooooo
The necessary training to do my job welloooooo
Support when I want to learn new skillsoooooo
Information on important developments that affect meoooooo
Fair pay for the responsibilities I have in my joboooooo
Fringe benefits that are fair compared to what employees doing similar work in other organisations getoooooo
The opportunity to address the identified needs of the customersoooooo
The resources necessary to meet the demands of delivering a serviceoooooo

Note: A = Not at all, B = To a very little extent, C = To some extent, D = To a great extent, E = To a very great extent, and F = Not sure/not applicable.

Appendix 2
How well your employer provides what they owe you?
Please indicate how well, overall, your employer has provided what you think is owed to you
Item/Response A B C D E F
Long-term job securityoooooo
Good career prospectsoooooo
The opportunity to do interesting workoooooo
Up to date training and developmentoooooo
The freedom to do my job welloooooo
The opportunity to be involved in decisions that affect meoooooo
Pay increases to maintain my standard of livingoooooo
Fair pay compared to employees doing similar work in other organisationsoooooo
The necessary training to do my job welloooooo
Support when I want to learn new skillsoooooo
Information on important developments that affect meoooooo
Fair pay for the responsibilities I have in my joboooooo
Fringe benefits that are fair compared to what employees doing similar work in other organisations getoooooo
The opportunity to address the identified needs of the customersoooooo
The resources necessary to meet the demands of delivering a serviceoooooo

Note. A = Not at all fulfilled, B = Poorly fulfilled, C = Somewhat fulfilled, D = Well fulfilled, E = Very well fulfilled, and F = Not owed.