Socio-economic studies have been reporting on the rapid growth of temporary employment and on its problematic nature in terms of low pay, limited access to fringe benefits, and limited union protection (Kalleberg, Reskin, and Hudson, 2000; Korpi and Levin, 2001). Temporary employment refers to dependent jobs of limited duration, with fixed-term employment contracts and temporary agency work being the most common contract types in Europe (OECD, 2002). With this evolution in the foreground, a major theme among work and organizational psychologists concerns the impact of temporary employment arrangements on employees’ well-being, attitudes, and behavior. The possible benevolent or detrimental consequences of temporary employment as compared to permanent employment are still hotly debated. Results until now have been inconclusive (Connelly and Gallagher, 2004; De Cuyper, De Witte, and Isaksson, 2005; Guest, 2004). While this has encouraged studies to explore the differences between permanent and temporary workers, the mixed evidence has resulted in a lack of theoretically informed studies (Davis-Blake and Uzzi, 1993). Hence, our understanding of the psychological impact of temporary employment and its underlying processes remains limited.

In this chapter, we formulate a theory that may respond to this lacuna. We draw upon psychological contract literature to interpret the inconsistent findings of contract type as found in previous research. Furthermore, we illustrate the possible implications of this theory for the experience and impact of job insecurity and employability.