The aim of this study was to investigate the impact of Human Resource Management (HRM) practices on the psychological
contracts of employees who have been negatively impacted by the widespread psychological recession. The prevalent
economic recession has made it difficult for organisations to uphold their psychological contracts to employees, thereby
contributing to a psychological recession - which is defined as an emotional state in which employees feel extremely vulnerable
to economic hardship. The target population consisted of all permanent support staff working at an organisation that had
recently experienced a large-scale retrenchment exercise (n=52). A self-administered questionnaire was distributed amongst
employees. The results, based on proven hypotheses, were summarised and depicted in a theoretical model. Inferential
statistics suggest that the harsh effects and negative impact of the psychological recession may contribute to employees
engaging in destructive work behaviour. A multiple regression analysis further emphasised the importance of HRM practices in
maintaining a positive state of the psychological contract. Organisations have to respond to the psychological recession by
carefully managing the employment relationship, and re-evaluating the effectiveness of their HRM actions and practices, in
order to maintain the commitment and loyalty of their employees.