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Two-tier system

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The two-tier system, in the context of labor relations, is a type of contract employed by companies to scale back negotiated wages and benefits.

When a two-tier system is in place in a new contract, workers hired before ratification of that contract have a wage progression table (or benefits) different from those hired after ratification.

Allegedly, companies in industries which experience a market downturn re-adjust wages to the new realities of the market without affecting workers with seniority. Critics argue this system creates a second-class of workers and causes high turnover.

Ian C. in Baker College's HRM 425 used this page as a reference for a Discussion Question.

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