Which statement about collective agreements and wage escalations is true?

• A. They may include a COLA escalator clause
• B. They must exclude automatic adjustments
• C. They cannot include any wage-based adjustments
• D. COLA is illegal in collective agreements

Answer: (A)

Wages in a collective agreement can be designed to adjust automatically with changes in the cost of living, through a COLA escalator clause. This is a legitimate bargaining tool: negotiators can decide to tie wage increases to an inflation measure (like the CPI) so wages keep pace with rising prices. It’s not required, but it is allowed, and it’s one of the ways wage escalations can be structured within a collective agreement. That’s why the statement stating they may include a COLA escalator clause is true. The other propositions aren’t correct because there is no rule that automatic adjustments must be excluded, no blanket ban on wage-based adjustments, and COLA isn’t illegal in collective agreements.