PSYCHOLOGICAL CONTRACT BREACH, WORK ENGAGEMENT AND TURNOVER INTENTION: Evidence from Banking Industry in Pakistan

Employees are one of the most important assets of an organization. In order to retain them, it is important to evaluate and analyze the exchange relationship of the employees and the organization, known as psychological contract. This study examines the impact of psychological contract breach on employees’ turnover intention with the mediating role of work engagement. An empirical study has been conducted to test the main effects and mediating hypothesis through Hierarchical Multiple Regression. A sample of 302 responses has been collected from private and public banks of Lahore. The results indicate that a negative relationship exists between psychological contract breach and work engagement. Similarly, work engagement negatively correlates with turnover intention of employees. Work engagement partially mediates the relationship between psychological contract breach and employees’ turnover intention. Therefore, if employees perceive psychological contract breach then it leads to low work engagement and high turnover intention. Practical implications of the results have been discussed.