Unemployment rates in the European countries have risen rapidly and the overall production output in virtually every sector (service, manufacturing, public) has dropped during the two year period 2008-2009 as compared to previous years (Gennard, 2009). In several cases, organizations are challenged not primarily by the need to generate profits, but predominantly by the need to survive. In that respect, firms have proceeded into a number of initiatives and measures in their attempt to reduce costs (increase efficiency) and simultaneously sustain part of their competitiveness, especially in the current turbulent market economies and environments (Gennard and Judge, 2005; Rose, 2004). According to Gennard (2009) employee relations have been at the spot of light during these years of recession, particularly in labor – intensive industries and sectors, where the pursuit of efficiency clearly pertains to the cutting back of costs allocated to the human resources. As demand decreases, production is pushed down and in turn the need for human resources becomes highly controllable (Hartley – Kite et al., 2010). As Farnham (2000) notes, economic recession and employee relations are largely interrelated in that the first clearly impacts the second within the overall organizational environment.
Lewis et al. (2003) define employment relationships as fundamental exchanges between employers and employees under the agreement of providing mental and physical ‘labor’ on the part of the employees, whereas the employers abide to offer rewards for the ‘services’ provided. Rose (2004) further states that the overall discipline of employee relations does not simply pertain to the ‘physical’ employment contract but on the ‘psychological contract’ between the two parties (employees and employers). Employee relations are focused on the establishment of grounds in which