Introduction Although the psychological contract as a concept in human resource management came into being in the 1960s, nevertheless, its re-emergence during the 1990s is especially remarkable, as it came at a time when several world economies were faced by the then economic recession. At the time, psychological contracts re-emerged as an outline for comprehending the manner in which changes within an organization could impact the behavior of the employees (Rousseau 2001), seeing that now an economic recession would lead to a possible loss of their jobs. Psychological contracts may be defined as the “set of expectations held by the individual employee”, and which seeks to spell out the expected input by both the organization and an individual, during the time in which the two entities are in a working relationship (Sims, 1994). From such a perspective then, it is not hard to realize that indeed, psychological contracts are vital to both an individual and the organization as well, a relationship that has been described by several organization management authors (Mowday, Porter & Steers, 1982) as an exchange relationship that transcends the complete contract continuum from stringently legal to entirely psychological (Spindler, 1994). Even as a majority of the aspects covered by this relationship could be well taken care of by legislation, inclusion in contracts of employment and which are signed by employees (may include salaries, working hours, and plans of benefits), still there is a high likelihood that some elements of the relationship of employment could as well be confined only to the subconscious (Spindler, 1994). A number of authors have referred to this phenomenon as a ‘hidden’ element (Eisenberger, Huntington, Hutchison, and Sowa, 1986; Greenberg, 1990). Essentially, it is this ‘hidden element that Argyris (1960), Schein (1980), and Rousseau (1989) refer to as a psychological contract. Psychological contract A major argument that revolves around the psychological contract theory is whether or not it ought to be viewed as ‘contract’, at least when this is compared with other formal contracts, and which consists of comparison with predetermined content whose parameters are quite clear ( Arnold, 1996). Divergent outlooks have it that psychological contract provides a perspective on a base that is more pragmatic, based on the perceptions of the parties involved, and as such, tends to exhibit a more profound influence in comparison with a formal contract (CIPD, 2003). On the other hand, Sparrow and Marchington (1998) maintain that an interaction exists between the psychological contract and contracts of employment since legal conditions and terms shall impact obligation perceptions. With regard to stringent comparison, psychological contract apparently appears to be an inherent reflection of the relationship of employment akin to legal contracts, though on a wider scale. Concerning power, the moment a breach of contract happens; this may adversely affect a firm, as well as its employees (Deery, Iverson, and Walsh, 2006). In concept, previous literature seems to hold that psychological contract differs from both an implied and formal contracts as it takes into account the beliefs of an individual regarding the employment terms and conditions that exist be