?Good Cause Beliefs? in an ?At-Will World?? A Focused Investigation of Psychological Versus Legal Contracts

Abstract

This study assesses the psychological contracts of a group of at-will employees and compares their relevant psychological contract beliefs with the terms of the controlling legal employment contract. In addition, we test specific hypotheses regarding the relationship between employers’ formal job security policy (employment at-will vs. “good cause” protection, and employee personal characteristics; equity sensitivity, organizational tenure) to 2 focal psychological contract beliefs (the employer’s obligation to have a good reason to discharge the employee, and the employee’s reciprocal obligation to have a good reason to leave his/her employer). These issues are investigated using survey data sampled from 15 diverse U.S. organizations, and independently collected information regarding organizations’ job security policies. The results provide evidence of a widely shared psychological contract belief that, despite explicit at-will policies, U.S. employers are highly obligated to have a good reason to discharge employees. Further, personal characteristics are more strongly related to the focal psychological contract beliefs than employer job security policies. The theoretical contribution of the study and its practical implications are discussed.