escalator clause

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Escalator clause

Provision in a contract allowing cost increases to be passed on. In an employment contract, for example an escalator clause may call for wage increases in line with inflation.

Escalator Clause

A clause in a contract stating that a certain payment increase will grow each year according to some formula stated in the contract. For example, an employment contract may have an escalator clause allowing for small increases in salary each year. An escalator clause usually exists to protect one party to the contract from inflation.

escalator clause

See escalation clause.

References in periodicals archive ?
The cyclical conditions prevailing in an industry may also influence the percentage of workers with escalator clauses. We hypothesize that workers place a relatively greater premium on wage indexation when the labor market is strong.
Part-time employees, by virtue of their shorter job horizon, are likely to place a lower value on escalator clauses than do full-time employees.
The percentage of union workers with escalator clauses also depends on regulatory and economic conditions in the industry.
A second major concern for the union is the possibility of unanticipated inflation, which would erode real wages under a long-term labor contract in the absence of a cost of living escalator clause and, again, cast an unfavorable light on the union leadership.
The presence of an escalator clause in the contract at least partially insulates the union from losses in real wages due to inflation and should, therefore, make the union more willing to consent to a contract of greater duration.
Boeing, they said, had benefited from price escalator clauses in its sales agreements that boosted 2000 operating revenues in a way that was not likely to be repeated in 2001