Being permanent in a temporary employment agency: longitudinal data on psychological contract fulfillment and the role of human resource management

Recent research suggests that the employment relationships of temporary agency workers and directly hired permanent workers tend to differ. However, few studies have focused upon the special situation of workers who are permanently employed by the temporary employment agencies. Accordingly, we investigate the possible differences in employment relationships between temporary and permanent agency workers. Employment relationships are conceptualized broadly along the lines of psychological contract literature, in particular psychological contract fulfillment. We hypothesize that the perceived fulfillment of client organization’s obligations is stronger for temporary agency workers than for permanent agency workers. The reason lies, we believe, with employee’s perceptions about the human resource management (HRM) practices that are being implemented by the client organization. We focus on HRM practices concerning a fair performance appraisal system, access to training and performance dependent rewards as investment HRM practices. Permanent agency workers did not receive a permanent contract with the client organization: therefore, they may perceive HRM practices negatively in terms of lack of investment in the workers, which would then lead to a lower psychological contract fulfillment. In contrast, temporary agency workers may still anticipate a permanent contract with the client organization: their psychological contract expectations are not yet breached. Drawing upon longitudinal survey evidence from a Portuguese call center, we have used information about type of contract and HRM practices from time 1 and data on psychological contract fulfillment from time 2. Our results suggest that permanent agency workers perceive to have a lower fulfillment of client obligations than temporary agency workers and this relationship is mediated by employee’s interpretations concerning the HRM practices implemented by the client organization. Although permanent agency work is established to provide a certain form of protection and thus to help the worker we demonstrated that it may have negative consequences as well.