An article in a collective agreement that stipulates a periodic increase or decrease in wages based on cost of living allowance (COLA) is referred to as a:

• A. escalator clause
• B. cost-of-living clause
• C. indexing clause
• D. wage adjustment clause

Answer: (A)

Automatic wage adjustments tied to changes in the cost of living are governed by an escalator clause. This provision automatically increases (or occasionally decreases) wages when the cost-of-living index changes by a defined amount, preserving workers’ purchasing power without needing to renegotiate every year. That automatic linkage to a COLA index is what makes it an escalator clause—the term specifically conveys upward (or downward) movement in wages in step with inflation. While a cost-of-living clause also deals with COLA, the escalator label is the standard way to describe the automatic, index-based wage changes. An indexing clause is related but broader, and a wage adjustment clause is more generic and not necessarily tied to a COLA index.