Cost of Living Allowance (COLA)/Escalator Clause
Cost of Living Allowance (COLA)/Escalator Clause : An amount which is periodically paid to an employee by the employer, to dampen the effect of inflation. It is also referred to as a "cost of living bonus", since by design; it seeks to maintain some consistency in the level of real wages. In calculating the COLA, movements in the retail price index are taken into consideration. The formula for the payment of the COLA is usually the subject for discussion between the trade union and the employer
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