Eligibility and conditions

Workers engaged through a labour hire agency are also covered, if they meet the criteria above.

If you use labour hire staff, you must ensure the worker retention payment is passed on to workers as higher wages. Funding cannot be used to pay for labour hire agency fees.

You should:

• work with the agency to determine how funding will be passed on
• update your contract with the agency to reflect these arrangements
• request evidence that funding has been passed on to workers.

We recommend you request evidence in one of the following formats.

A formal declaration with:

• the names of the workers who received funding
• the amount of funding provided to each worker (hourly pay rate + super)
• the period for which the funding was made, including any backpay
• details about any updates to contracts with workers about the arrangements, with details of the relevant clauses and the effective date.

Invoices or supplementary invoice reporting with:

• a line item for the worker retention payment, showing the total amount claimed for the invoice period
•  a detailed breakdown for each eligible worker including the worker’s name, hours worked and corresponding funding amount
• a line item for any backpay being claimed, including the period for which the backpay applies.

You must be able to show in your reporting that all funding has been passed on to eligible workers. You do not need to seek evidence that the labour hire agency has a compliant workplace instrument in place.
 

There are many different types of workplace instruments. Selecting the right one depends on your individual business needs.

Learn about the types of workplace instruments you may use.

You must:

• give all eligible workers information about compliant workplace instruments
• provide them with the factsheet available on GrantConnect
• take all reasonable steps to engage all eligible workers under a compliant workplace instrument.

You must not pressure workers to agree to, or terminate, a workplace instrument.

If you are unable to engage all eligible workers under a compliant workplace instrument, we may deem you eligible if:

• at least 95% of eligible workers are covered
• you can show you took all reasonable steps to cover all workers.

The fee growth cap that applies to your service depends on your circumstances:

For services that applied before 1 December 2025, the fee growth caps are:

• 4.4% between 8 August 2024 and 7 August 2025
• 4.2% between 8 August 2025 and 7 August 2026
• 5.8% between 8 August 2026 and 7 August 2027.

For services that apply for funding from 1 December 2025 to 30 November 2026, the fee growth caps are:

• 8.6% between 8 August 2024 and 7 August 2026*
• no higher than 4.2% between 8 August 2025 and 7 August 2026
• 5.8% between 8 August 2026 and 7 August 2027.

*Services may instead meet this requirement by keeping fee increases within 4.4% from 8 August 2024 to 7 August 2025 and 4.2% from 8 August 2025 to 7 August 2026.

For all other CBDC and OSHC services applying for funding from 1 December 2026, the fee growth cap is:

• 5.8% between 17 June 2026 and 7 August 2027.

For FDC and IHC services, the fee growth cap is:

• 5.8% between 17 June 2026 and 7 August 2027.

Future fee growth caps will be based off the Childcare Services Cost Index.

The Childcare Services Cost Index is a new index developed by the Australian Bureau of Statistics. It measures changes in prices paid by providers for the goods, services and labour they buy to deliver child care.

My service announced a fee increase of more than 5.8%. Do I need to reduce it?

If your service did not have a grant agreement on 17 June 2026 and announced a fee increase of more than 5.8%, you may need to reduce the increase to remain eligible for funding.

We assess fee increases based on when families are first charged the higher fee, not when the increase was announced.

For example, if you notified families of a fee increase before 17 June 2026, but the higher fee was not charged until on or after 17 June 2026, the increase is treated as taking effect on or after 17 June 2026.

If the increase would exceed the fee growth cap that applies to your service, you must reduce the increase so it stays within the cap to remain eligible for funding.

This is particularly relevant for newly eligible services that became subject to a fee growth cap for the first time from 17 June 2026.
 

Established services

You can only increase hourly fees by up to the fee growth cap in the relevant period.

Example:

• Service A charged $14.50 per hour on 8 August 2025.
• The maximum hourly fee it can charge up to and including 7 August 2026 is $15.11 (a 4.2% increase).
• Charging more than $15.11 per hour during this period will be a breach of its grant agreement.

New services

You can set your starting hourly fees. Once set, these become the baseline for the current fee growth cap period. This applies even if another service previously operated at the same site.

Example 1:

• Service B opens on 1 December 2025 and sets initial fees at $15.50 per hour.
• The maximum hourly fee it can charge up to and including 7 August 2026 is $16.15 per hour (a 4.2% increase).

Example 2:

• Provider X starts operating a new OSHC service at a school on 2 January 2026. The school previously had a different OSHC service.
• As a new service, Provider X sets the new OSHC service’s hourly fee at $13.00 per hour.
• The maximum hourly fee it can charge up to and including 7 August 2026 is $13.55 per hour (a 4.2% increase).

Transfer of service ownership

The new provider must apply the fee growth cap based on the service’s existing baseline.

Example:

• Provider Y acquired Service C from another provider on 1 December 2025.
• If Service D charged $13.50 per hour on 8 August 2025 under the previous provider, the maximum hourly fee Provider Y can charge up to and including 7 August 2026 is $14.07 per hour (a 4.2% increase).

Transfer of provider ownership

The new provider must apply the fee growth cap to each service based on its existing baseline.

Example:

• A new owner acquired Provider Z and all its services. On 8 August 2025:
  • Service D charged $13.30 per hour
  • Service E charged $13.60 per hour
  • Service F charged $13.90 per hour.
• The maximum hourly fee Provider Z can charge up to and including 7 August 2026 is:
  • $13.86 per hour for Service D (a 4.2% increase)
  • $14.17 per hour for Service E (a 4.2% increase)
  • $14.48 per hour for Service F (a 4.2% increase).

Relocated service

A relocated service is treated as a new service – the above rules relating to “new services” apply.

Example:

• Service H charged $15.50 per hour on 8 August 2025. It relocates on 1 February 2026 and resets fees at $16.50 per hour.
• The maximum hourly fee it can charge up to and including 7 August 2026 is $17.19 per hour (a 4.2% increase from the reset fee). 

You can request an alternative fee growth cap for one or more services in limited circumstances where financial viability is impacted.

Financial viability is the ability to maintain the existing standard of service offering based on current level of revenue.

You can request an alternative fee growth cap in the grants portal. You can do this:

• when you first apply for the worker retention payment – via your initial grant application
• while awaiting approval or at any time during your grant agreement – via a variation request form.

You must:

• show financial viability issues at both the provider and service level
• propose an alternative fee growth cap for each service.

You must provide:

• a financial statement for the most recent financial reporting period
• financial information for each service
• current proposed service fees.

In the rare case a financial statement is not available, we may accept alternative evidence that shows operating profit and loss occurred over a reporting period. This evidence must be supported by a signed statutory declaration confirming the accuracy of the information.

All evidence must be signed and dated by:

• an internal public accountant, or
• a senior authorising officer such as a Director, Chief Executive Officer or financial manager.

We may ask you for more information where necessary.

How we assess applications

We assess requests based on your financial position and operating circumstances. We assess:

• large providers against our financial viability framework for large providers
• small and medium providers based on earning margin or profitability over the most recent financial reporting period.

If more than 3 months have passed since the most recent reporting period and your circumstances have changed, we will assess your application based on earning margin or profitability, combining results from:

• the most recent full reporting year
• year-to-date financials in the current reporting year.

We will consider:

• revenue
• costs
• net operating profit or loss
• specific costs in net operating profit/loss such as depreciation, amortisation and finance cost.

When assessing costs for financial viability, we:

• will consider the financial data in your application and any unique circumstances such as repair costs due to extreme weather events
• will not consider costs that are not necessary to sustain current operations such as capital for expanding or opening a new service.

If approved, we will set an alternative cap for each service. This may be at your proposed cap or another percentage that we determine.

If not approved, you may continue under the standard cap or withdraw the service from the program.

You can reapply if your circumstances change.

We outline the minimum rates that you must pass on to help you meet this condition.