The and inverse relationship with employees’ job satisfaction

purpose of this study is to investigate relationship between Psychological
Contract Breach, Job Satisfaction, while focusing on the mediating role of Occupational
Stress. The original concept of the Psychological Contract first took shape in
the 1960s (“The Psychological Contract”, 2017), and gained much recognition in
Denise Rousseau’s article “Psychological and implied contracts in
organizations” (Rousseau, 1989). Since then, there have been many contributions
to this topic and there is an increasing focus on its relationship and
implications with other workplace factors, namely such as, job satisfaction and
occupational stress. Job satisfaction develops through cognitive and affective
reactions of employees to their jobs (Locke, 1969; Judge and Ilies, 2004; Rich
et al., 2010) and Psychological Contract Breach, as suggested by the
literature, appears to have a significant and inverse relationship with
employees’ job satisfaction (Portwood & Miller, 1976).  The perceived fulfillment of the
Psychological Contract has been found to serve as a motivational factor for the
employee that ultimately leads to an enhancement in work and a perceived breach
leads to a loss of motivation and loss of effort (Parzefall & Hakanen,
2010).  Occupational stress, also known
as job stress, is an employee’s psychological and physiological reaction in the
situation where the demands of their work exceed their abilities and resources
(Colquitt, LePine & Wesson, 2013). Extreme stress occurring due to unmet
expectations, can lead to decreased productivity and according to Yaacob &
Long (2015) individuals with a higher percentage of occupational stress may not
be satisfied with their job and would, as a result, therefore not feel happy
working in the organization.

Problem Statement

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in the past have placed more focus on the development of the Psychological
Contract and what factors may contribute to either its fulfillment or breach in
the workplace (“The Psychological Contract”, 2017). Through current research
conducted in recent years, the Psychological Contract has gained prominence in
literature with more emphasis now being placed on the impactions and effects of
its fulfillment and breach. As a result of findings of such studies, the
psychological contract has been linked to significant work outcomes such as
commitment, job satisfaction, worker engagement and performance (“The
Psychological Contract”, 2017).

regard to the Pakistani context, very limited research has been done on the
topic of Psychological Contract and its implications, however the studies that
have been conducted support the general consensus that perceived psychological
contract fulfillment or breach impacts the employees’ attitude towards their
jobs (Mubeen, 2009; Ahmed, Nisar & Naqvi, 2016; Khalid & Malik, 2016).
studies have also been conducted within different sectors concerning the impact
of occupational/job stress on job satisfaction and have found similar results
that support the overall negative relationship between the two variables
(Mansoor, Fida, Nasir & Ahmed, 2011; Khan, Ramzan, & Butt, 2013;
Razzaghian & Ghani, 2015; Danish, Shah, Aslam & Ali, 2015; Riaz, Ahmed,
Riaz, Murtaza, Khan & Firdous, 2016).

Contracts play an essential role in deciphering employer-employee relations and
employee behavior in general. The breaching of such contracts have a
significant negative impact on an individual’s well-being (Reimann & Guzy,
2017), therefore, it is important to shed more light on how Psychological
Contract Breach acts a workplace stressor and what implications it holds on
employees’ overall job satisfaction while looking into what other constructs
may influence or facilitate this particular relationship. Since no evidence of a
research focusing on all three variables together was found and it is believed
that such a study is expected to contribute to literature.


idea of the Psychological Contract first emerged in the 1960s, and since then
there have been many contributions, with the focus of research now shifting
towards the implications of the Psychological Contract in the workplace and its
relationship with other workplace factors and outcomes, as compared to earlier
researches such as those of Morrison and Robinson (1997) and Cullinane and
Dundon (2006) that primarily focused on its development (“The Psychological
Contract”, 2017).  This, however, is
still a relatively new area of research and while the relationship between
Psychological Contract Breach and Job Satisfaction has been established, a gap
still exists concerning what other factors or variables may facilitate or
impact this relationship, which is particularly why this research focuses on
the role of occupational stress, one of the major health hazards of the modern
workplace, as mediator.

Importance of research

made evident by the literature, Psychological Contract is becoming an
increasingly relevant aspect of workplace relationships and employee behavior
in general (“The Psychological Contract”, 2017). Previous researches on
psychological contract breach have sought to understand its relationship with
job satisfaction. This current study will add to the existing body of
literature by exploring the mediating effect of occupational stress on the
relationship between psychological contract breach and employee’s job

by realizing the implications of a psychological contract breach, organizations
would perhaps be better able to assess and manage how to avoid such breaches
and enhance job outcomes. Finally, the findings of this study would also add to
the importance of the Psychological Contract in the workplace, the breaching of
which has become a norm rather than an exception and the serious implications
it can hold on an employee’s health and their work. This study will also
highlight how the psychological contract serves as an important factor in
determining an employee’s level of satisfaction with their job and work. Implications
of the findings would be discussed to gain better understanding on how the
avoidance of PCB can lead to better management of job satisfaction.


main objective of this research is to study the relationship between PCB and
Job Satisfaction in small-scale companies in private sector of Lahore,
Pakistan. The role of Occupational Stress as a meditating variable is also to
be investigated in order to shed more light on the importance of Psychological
Contract Breach and its implications and consequences within the workplace.