Threshold agreement


Part of a contract of employment whereby the employer agrees to grant a fixed percentage increase in wages when the cost of living, as measured by, e.g. the retail price index, moves above a predetermined level. The increases may be tied to successive movements in the index and become payable, say, every time there is an upward movement of so many points. This type of agreement though theoretically sensible, is not popular in the United Kingdom because of its built-in inflationary pressures. 

Reference: The Penguin Business Dictionary, 3rd edt.