escalator clause n1 : a clause in a contract that provides for an increase in the amount of the payments made under the contract to reflect an increase in costs or the raising of a government-imposed cap on costs
2 : a clause in an employment contract that provides for an increase in wages to reflect a rise in the cost of living but prohibits a decrease to reflect a drop in the cost of living
Source: Merriam-Webster's Dictionary of Law ©1996. Merriam-Webster, Incorporated. Published under license with Merriam-Webster, Incorporated.