Reflecting upon principles residing at the heart of the ‘Contract of Employment’




This blog is likely to contain serious errors in Contract of Employment law, so it is vital that anyone considering taking action utilising any of these points seeks proper and professional legal advice first. My knowledge of the detail of both employment and contract law is extremely rusty and cannot be wholly relied upon. My intention is to sift through existing wisdom in order to identify the underlying principles applying to the heart of any contract between government and its public servants. How these principles work in current practice is not my area of expertise, hence the need for professional advice.]




In Britain, employment is governed by contract law. It can be a contract between employer and employee or a business contract between purchaser and supplier in the case of those who are self-employed. The history of how current Employment Law (pdf) came into existence is interesting because it reflects changing social relationships within the UK.

Issues surrounding employment were first set into law by the Factories Acts of 1802 and 1833, and the relationship between employer and employee was first set down within the Master and Servant Act of 1832. This act remained in force until it was succeeded by the Contracts of Employment Act 1963. This last act introduced and codified the responsibilities of both employer and employee, and it is the principles involved with this relationship that this piece seeks to explore.

Like most, employment law is not perfect and reflects the attitudes of the time.  As labour lawyer, Otto Kahn-Freund, put it:

 “the relation between an employer and an isolated employee or worker is typically a relation between a bearer of power and one who is not a bearer of power. In its inception it is an act of submission, in its operation it is a condition of subordination, however much the submission and the subordination may be concealed by the indispensable figment of the legal mind known as the ‘contract of employment’. The main object of labour law has been, and… will always be a countervailing force to counteract the inequality of bargaining power which is inherent and must be inherent in the employment relationship.”

It was the following tweet and its commentary on one person’s experience of the relationship between the UK government and its police that has prompted this particular exploration.

To all intents and purposes, the tweet describes a Master/Servant relationship where the actions of the ‘Master’ are experienced as repressive by the ‘servant’. It’s therefore worth remembering that Master/Servant approach was replaced, even if old attitudes die hard. These days, it is a legal contract that theoretically occurs between consenting adults and the contract fails if one party acts in such a way that the ‘heart’ of the contract is breached.


The Psychological Contract


Whilst any employment contract is subject to prevailing law, it will inevitably contain a psychological component simply because it legislates human relationships. This dynamic has been called the “Psychological Contract”:-

“’The Psychological Contract’ is an increasingly relevant aspect of workplace relationships and wider human behaviour.

Descriptions and definitions of the Psychological Contract first emerged in the 1960s, notably in the work of organizational and behavioural theorists Chris Argyris and Edgar Schein. Many other experts have contributed ideas to the subject since then, and continue to do so, either specifically focusing on the Psychological Contract, or approaching it from a particular perspective, of which there are many. The Psychological Contract is a deep and varied concept and is open to a wide range of interpretations and theoretical studies.

Primarily, the Psychological Contract refers to the relationship between an employer and its employees, and specifically concerns mutual expectations of inputs and outcomes.

The Psychological Contract is usually seen from the standpoint or feelings of employees, although a full appreciation requires it to be understood from both sides.

Simply, in an employment context, the Psychological Contract is the fairness or balance (typically as perceived by the employee) between:

  • how the employee is treated by the employer, and
  • what the employee puts into the job.

The words ’employees’ or ‘staff’ or ‘workforce’ are equally appropriate in the above description.

At a deeper level the concept becomes increasingly complex and significant in work and management – especially in change management and in large organizations.

Interestingly the theory and principles of the Psychological Contract can also be applied beyond the employment situation to human relationships and wider society.

Unlike many traditional theories of management and behaviour, the Psychological Contract and its surrounding ideas are still quite fluid; they are yet to be fully defined and understood, and are far from widely recognised and used in organizations.

The concept of ‘psychological contracting’ is even less well understood in other parts of society where people and organisations connect, despite its significance and potential usefulness. Hopefully what follows will encourage you to advance the appreciation and application of its important principles, in whatever way makes sense to you. It is a hugely fertile and potentially beneficial area of study.

At the heart of the Psychological Contract is a philosophy – not a process or a tool or a formula. This reflects its deeply significant, changing and dynamic nature.

The way we define and manage the Psychological Contract, and how we understand and apply its underpinning principles in our relationships – inside and outside of work – essentially defines our humanity.

Respect, compassion, trust, empathy, fairness, objectivity – qualities like these characterize the Psychological Contract, just as they characterize a civilized outlook to life as a whole.”

For the most part, addressing the issues contained within a psychological contract is actually in an employers interest and forms the bedrock of good management-employee relations. It informs the adult-to-adult dynamic of the Contract of Employment itself. For example: if a Contract of Employment recognizes that human qualities such as mutual respect, compassion, trust, empathy, and fairness reside at the heart of the agreement, then any failure impacts in the same place.



An Employee’s Perception of Power


If we accept Otto-Kahn-Freund’s definition that the Contract of Employment is “a relation between a bearer of power and one who is not a bearer of power”, it becomes important to explore how this dynamic impacts upon the psychological contract.

From a psychotherapeutic perspective, this relates to the uses of power within the workplace and elsewhere. As a management trainer, I used the following examples to tease out how any power dynamic functions.


Power-over is the position that most people recognize when such discussions arise. It is an aggressive principle that forces its own perception upon those it deems to be less powerful than itself. To function effectively, it requires others to adopt the next position.


Within the power dynamic, to be powerless is to be passive; to accept, without question, the edicts of those who occupy the ‘power-over’ position. It is a depressed/oppressed position and I found it informative, when teaching this, to ask course participants whether they liked being powerless because the response would often lead directly into the third position of the power dynamic.


Power-under is the response of those who, finding themselves powerless within an unhappy power dynamic, seek to undermine those occupying the power-over position. It is a passive-aggressive response from below in reply to perceived power-over abuses from above.

All the above positions depend upon the perception that power can be divided up into hierarchies of who has power, who doesn’t and how the powerless feel about it. There is, however, a fourth position that stands outside this dynamic altogether.


To be a powerful human being does not reside in any hierarchical social position – it belongs to anyone who wishes to claim it and it is the provenance of adults. To be powerful recognizes that each of us have responsibility and a duty to exercise that responsibility within any psychological contract we might consent to. For example: a Chief Executive and a cleaner can both discharge their duties in a powerful/responsible manner – it is a matter of personal choice. At the same time, individuals can divest themselves of this personal power in which case they volunteer themselves to be part of the hierarchical power dynamic where everyone blames everyone else for the failures piling up around their ears.

In a healthy psychological contract, the employer seeks to employ powerful and competent adults who will be treated with respect, compassion, trust, empathy, fairness, objectivity whilst they discharge their duties. This is the benchmark for good employment practice. Done well, it can result in employees agreeing to reductions in terms and conditions, especially through difficult economic times, because they get on well with their employer and are willing to share the burden. If, however, the employment contract serves only to reinforce the hierarchical positions of power and where the psychological contract is arbitrarily dispensed with by the employer, the results are disputes and, where unionized, industrial action.

That the UK is apparently facing the possibility of its first general strike in over eighty years suggests that there has been a significant and dramatic failure of both employment and psychological contracts. That UK police and prison officers – whose contracts of employment actually forbid industrial action – have now started considering and acting out their response to government-imposed changes to their terms and conditions points to how serious the situation has become.



The Heart of the Contract of Employment


I’m going to look at this from the perspective of civil and crown servants simply because the heart of the contract between Crown and Servant has been made explicit. Please bear in mind that these are only my observations. My opinion may carry no weight in law and therefore needs to be checked.

At the heart of the psychological contract are the following conditions: respect, compassion, trust, empathy, fairness, and objectivity. At the heart of the Crown contract, a servant must demonstrate the four core values detailed below:

  • ‘Integrity’:  putting the obligations of public service above your own personal interests;
  • ‘Honesty’: being truthful and open;
  • ‘Objectivity’: basing your advice and decisions on rigorous analysis of the evidence; and
  • ‘Impartiality’: acting solely according to the merits of the case and serving equally well Governments of different political persuasions.

In addition, if a civil servant believes that that he/she is being asked to behave in a way which conflicts with the code, he/she may now report the matter direct to the Civil Service Commissioners.

It is now clearly specified that the code is part of the contractual relationship between the civil servant and his/her employer.

As an observer, I would wonder whether these legal requirements for integrity, honesty, objectivity and impartiality also fall upon the employer too. If they do, and there is objective and politically impartial evidence to show that the employer is failing to adhere to these requirements, I would suggest that this may go to the Heart of the employees’ Contract of Employment. It may be that an employers’ breach of the Civil Service Code could be deemed sufficient to render previously forbidden industrial action lawful especially if the action sought to impose ‘fair’ conditions, like integrity and honesty, upon government in this instance. It would probably be necessary to demonstrate that individual members of government were failing to adhere to their own Code of Conduct with objective and impartial evidence.

To the best of my knowledge, no employee of any description is ever required to obey an unlawful order. If orders can be shown to be unlawful, in my own mind it becomes the responsibility of the employee to disobey them. It may also be the case that employers issuing unlawful orders can be subject to sanctions, but this would have to be determined by competent, professional legal minds.




To repeat, my observations must not be assumed to be legally accurate. They need to be checked and examined by those whose social responsibility it is to understand these intricacies. My skills relate to teasing out the underlying power dynamics and principles within human relationships, coupled with an ‘ancient’ experience of employment law pertaining to the public sector of local government.

Whether my opinion has any worthwhile contribution to make in resolving the present social unrest amongst the public servants of my country remains to be seen.

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