A fundamental definition of the psychological contract appears in Michael Armstrong`s excellent handbook of Human Resource Management Practice (10th edition, 2006): “. the employment relationship consists of a unique combination of beliefs that the individual and his employer have about what they expect from the other… By definition, the psychological contract represents the understanding of mutual expectations between workers and employers. As a concept, the psychological contract will evolve and evolve, both in its impact and in its definitions. You will see many and different definitions of the psychological contract. It is a complex concept when considered beyond its most fundamental principle, and it is dynamic when considered in a single situation: it is not solid or static – it contains forces and feelings that can fluctuate and be quite chaotic. Psychological contracts are defined by the relationship between an employer and an employee, where there are unwritten mutual expectations for each party. A psychological contract is defined as a philosophy, not as a formula or a designed plan. Characterize a psychological contract by qualities such as respect, compassion, objectivity, and trust.  Psychological contracts are formed by beliefs about exchange agreements and can arise in a large number of situations that are not necessary for changing workers.  However, the most important thing in its function is to define the relationship between the employer and the worker in the workplace.
As such, the psychological contract is an essential but implicit agreement that defines employer-employee relations. These contracts can, in certain circumstances, create virtuous and infernal circles. Several scientists define the psychological contract as a perceived exchange of correspondence between one person and another party.  The psychological contract is a kind of social exchange relationship.  Parallels are drawn between the psychological contract and the theory of social exchange, because the value of the relationship is defined by a cost-benefit analysis.  The implicit nature of the psychological contract makes it difficult to define, although there is a general consensus on its nature. This consensus identifies psychological contracts as “guilty, implicit, reciprocal, perceptual and based on expectations.”  A healthy psychological contract is a treaty in which both parties agree that there is a fair balance between giving and receiving. . . .