Fairness and Implied Contract Obligations in Job Terminations: A Policy-Capturing Study

Abstract

Using the methodology of policy capturing, this research identifies factors that contribute to two aspects of the decision to terminate employees: the fairness of the individual termination decision and the belief in an implied contract obligating the employer to retain the employee. Adopting the perspective of reasonable third parties, the relative contributions of Time on the Job, Formal Commitments, Reasons for Termination, Severance, and History to beliefs in fairness and obligations were assessed in the decisions of 171 participants in human resource management courses. Time on the Job and Formal Commitments were important factors in beliefs in implied contract obligations. Time on the Job, Formal Commitments, Severance, and Reasons for Termination were important to judgments of fairness. Employability and History did not influence either beliefs of fairness or obligation. These third party perceptions, although suggestive, need not generalize to those of victims in actual termination situations. This study's limitations are discussed as are its implications for future studies of termination fairness and obligations.