Consequences of Psychological Contract Breach

In figure 3, Cost to the organisation indicates that in the case of psychological contract breach, an organisation can suffer a significant amount of financial, resources and time loss resulting in a long-term impact on the organisation productivity and employee welfare. This alone can result in the organisation to face difficulties in upkeeping the psychological contract between its current employees. Furthermore, if the employee believes that the employer has violated the understanding and the terms of the psychological contract, the employee's reaction may vary from acceptance of the consequences to resignation from the post.  This is because employees tend to believe in their entitlements and being violated the contract, they will feel cheated by the employer and have wasted their time by working for them (Middlemiss, 2011).