PurposeThe purpose of this paper is to explore the relationship between psychological safety (PS) and employee retention (ER) when psychological empowerment (PE) is a mediator variable and abusive leadership is a moderating variable.Design/methodology/approach The study was conducted by receiving responses from managers and supervisors of the telecom industry. The sample size was 337. Standard questionnaires were used to collect data. Moderated mediation analysis was conducted to capture the differences on the effect of ER because of the presence of abusive leadership.FindingsThe findings of the study revealed that the abusive leadership moderates the relationship between employees PS and PE. The mediation effect of PE between PS and ER relationship was found to be significant. The relationship got weaker in the presence of high abusive leadership and stronger in the presence of low abusive leadership.Practical implicationsThe paper discusses the drawbacks of abusive leadership on ER. Abusive leadership may bring immediate results. Employees may respond out of fear but would leave the organization as soon as they will get the opportunity. Originality/valueThe study on the abusive leadership is relatively less. The moderating role of abusive leadership on ER would add to the subject knowledge.