The purpose of this study is to examine the consequences of relational and transactional psychological contract breach on turnover intention with the mediating variables job satisfaction and affective commitment in the employees working in the banking sector of Pakistan. Questionnaire were distributed to the employee working in the banking sector of Karachi. Total 268 sample size were used in this thesis. SEM has been used with the help of Smart-PLS to check the relationship between the variables. Convergent and discriminant validity have been evaluated. Boot strapping has been used to test the direct and mediating effects. The findings of this study showed that the relational PCB has a significant and positive impact on TI while the PCB has neglible impact on the TI. TBC has a significant and negative impact on both JS and AC. RBC has a significant and negative impact on both job satisfaction and affective commitment. Job satisfaction was found to mediate the association between both relational and transactional psychological contract and turnover intention while affective commitment was found to arbitrate the TBC and turnover intention, but not RBC and turnover intention. The finding provides some practical implication for the organization. During the hiring process itself, organizations should not make any unrealistic promises. The organization Rules, Policies and Procedures should be grounded on equality and fairness. Organization should make sure that the performance reviews are conducted on the regular basis. If organization had fail to make any promise or expectation they made to the employee, then they should communicate clearly and give some explanation why the certain expectation couldn’t meet. The finding provides new intuition into the aspects effecting employee turnover intention. Previous study presenting turnover models mostly used job satisfaction, leadership and organizational commitment, either correlation-ally or independently, but there is less focus on the psychological contract breach impact on turnover intention. This research make a contribution to current studies on psychological contract and will assist for further studies. This study finding will also aid the organization and manager in minimizing turnover intention of the employee.
Keywords: Transactional Psychological Contract, Breach (PCB), Relational Psychological Contract, Breach (RBC), Turnover Intention (TI), Job Satisfaction (JS), Affective Commitment (AC).