Early childhood wages

The worker retention payment is a grant from the government. It’s paid to ECEC services to help increase your workers’ wages.

The payment will run for 2 years, from 2 December 2024 to 30 November 2026.

Through the worker retention payment, the government intends for all participating providers to receive funding to cover:

• a 10% wage increase for all eligible staff in the first year
• an additional 5% wage increase for all eligible staff in the second year
• a minimum of an additional 20% funding to contribute towards eligible on-costs (calculated against your base funding).

The payment is calculated on the current national award rates.

To get the payment, providers must:

• apply
• meet the eligibility criteria
• comply with conditions.

The payment will be issued through a grant agreement. Providers must pass the payment on to eligible ECEC workers as a wage increase.

Applications opened on 8 October 2024. Providers can apply at any time before 30 September 2026.

We understand meeting certain conditions, like having a workplace instrument, may take time. We will backdate payments in the circumstances outlined below.

Providers must use the payment to give all eligible ECEC workers a wage increase.  

The payment will cover ECEC workers who:

• work at an eligible service that opts in to the payment, and
• are covered by either the Children’s Services Award 2010 or the Educational Services (Teachers) Award 2020, or
• primarily undertake the duties covered in either of these awards but are covered by a different award or instrument, like a state industrial instrument.

This may include:

• early childhood teachers
• educators
• cooks
• coordinators
• room leaders
• support workers
• trainees and apprentices.

Head office staff and other administration staff do not meet the eligible worker threshold.

Employment types

Casual, part-time and full-time workers who meet the eligibility requirements are eligible.

Labour hire

The government intends for all workers covered by the awards, or undertaking duties covered by the awards, get a wage increase. This includes workers engaged through a labour hire agency.

The worker retention payment is paid to eligible CCS-approved services. Any funding provided by a service to a labour hire agency must be passed on to workers as higher wages. Funding cannot be used to pay for the agency’s fees. Labour hire agencies must pass on the applicable minimum rates as set out in the guidelines to workers.

Services that employ workers through a labour hire agency should:

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

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

A formal declaration confirming the worker retention payment has been passed on to eligible workers. The declaration could include:

• 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 showing the worker retention payment has been passed on to eligible workers. The invoice or supplementary report could include:

• 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.

Providers must be able to show that all funding was passed on to workers in their annual reporting. Providers do not need to seek evidence that the labour hire agency has a compliant workplace instrument in place. 

New employees

New workers entering your workplace during the grant period will be eligible as long as they:

• meet the eligibility requirements set out above
• are covered by a compliant workplace instrument.

Providers must limit fee growth by a set percentage to get the worker retention payment. This is known as the fee growth cap.

The fee growth cap is:

• 4.4% between 8 August 2024 and 7 August 2025
• 4.2% between 8 August 2025 and 7 August 2026
• an amount equivalent to the specified growth rate based on the Childcare Services Cost Index between 8 August 2026 and 30 November 2026.

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.

The fee growth cap is an important condition of the worker retention payment. It:

• supports affordable early childhood education and care
• ensures the cost of a wage increase is not passed on to families.

Monitoring

We will monitor fee growth for the duration of the term of your grant agreement. If we think you are breaching this condition, we:

• will contact you
• may terminate your payment, withhold your payment, require you to repay funds or take other action in accordance with the grant agreement.

Costs included in the fee growth cap

All service costs included in your reported fees are subject to the fee growth cap. Any costs charged as extras, and not part of your reported fees, are excluded from the fee growth cap.

Vacation care services may increase fees for excursions. Excursion costs excluded from the fee growth cap should reflect only the actual cost of excursions. We may require information from providers to demonstrate this.

New services

New services that open after 8 August 2024 can set an initial service fee. The fee growth cap will then apply to this fee. For a service that has had a change of ownership after 8 August 2024, refer to transferring or acquiring a service.

Examples

Existing services with established fees

Service A charged $150 per session on 8 August 2024. The maximum fee service A can charge between 8 August 2024 and 7 August 2025 is $156.60. If service A charges more than $156.60 during this period, they will be in breach of their grant agreement and may need to repay funds.

New services

Service B opens on 1 December 2024 and sets their fees at $160 per session. The maximum fee service B can charge between the date of opening and 7 August 2025 is $167.04.

You must pass funding on to eligible workers as a wage increase.

You must pass on the additional minimum hourly amount from the grant guidelines to all eligible workers. You must do this even if you already pay above award.

An exception applies in the case of the Annual Wage Review uplift when you already pay the new minimum hourly rates as per the grant guidelines. In this case, an additional uplift is not required.

For example, a provider pays a worker (on Level 3.1 of the Children’s Services Award 2010) an above award rate of $30/hour. From 2 December 2024, they are required to apply the minimum hourly increase of $2.72 on top of the worker’s current rate. From 1 July 2025, they must continue to pay at least the minimum total hourly rate of $30.93. As the worker is already being paid more than 10 per cent above applicable award rates ($32.72/hour), the provider is not required to further adjust the worker’s hourly rate of pay.

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

On-costs

The worker retention payment will include at least an additional 20% funding for on-costs. This is on top of funding to cover the wage increase for eligible staff.

Once you have paid all eligible workers at least the minimum rates, you may use remaining funds for eligible on-costs.

On-costs are the additional costs of employing workers on top of paying wages. The eligible on-costs are:

• superannuation contributions
• employee entitlements
• leave loadings
• workers’ compensation insurance
• payroll tax.

Historical leave liability payment

Applications for a one-off payment for accrued historical leave liabilities have closed on 30 June 2025.

Other purposes

You may only use the worker retention payment to:

• pay eligible workers a wage increase
• cover eligible on-costs.

You cannot use funding for any other purpose, including:

• decreasing what you currently pay in wages and substituting with the worker retention payment (except where a provider is required to pay an uplift to the Children’s Services Award 2010 as required by the Fair Work Commission’s gender undervaluation proceedings before being issued with a grant agreement).
• costs incurred in preparing your application
• costs associated with facilitating the wage increase such as administrative expenses, accounting, legal fees or financial advice
• costs associated with joining or developing a workplace instrument.

Providers can apply for the worker retention payment via the online application form.

You must be registered to use the application form. Registration is free.

See our guide with everything you need to know to apply for the payment.

Successful applicants will enter into a grant agreement with the department. It will outline:

• eligible services
• eligibility requirements
• grant conditions
• reporting requirements.

A sample grant agreement is available on GrantConnect. It does not constitute a grant offer. We will include specific details about each grant before providing to any potential grant recipients.

If you breach the conditions of your grant agreement, we may:

• terminate your payment
• require funds paid to be returned to the Commonwealth.

Through the worker retention payment, the government intends for all participating providers to receive funding to cover:

• a 10% wage increase for all eligible workers in the first year
• an additional 5% wage increase for all eligible workers in the second year
• a minimum additional 20% funding for eligible on-costs (calculated against your base funding).

For most providers, a standard payment calculation will cover these costs.

In limited circumstances, providers who are not adequately compensated can get a top up payment.

Standard payments

The standard payment calculation is based on the labour costs for the charged hours of care provided at a service each month. Charged hours of care is determined by data from the Child Care Subsidy System.

This calculation:

• considers the number of children you provide care for
• considers the individual characteristics of your service
• balances supporting quality ECEC and standard rostering practices.

Accounting for seasonality

Many services experience seasonal fluctuations in their charged hours of care and staffing levels.

We are adjusting funding for Centre Based Day Care services to account for session reporting trends throughout the calendar year. This will be calculated as an additional percentage of your monthly payment, including:

• 10% increase in December
• 15% increase in January
• 5% increase in February.

This advance will be recovered via reduced payments from August to October. This helps balance monthly payments over each 12-month period.

Smoothing payments

Providers with multiple services may experience months where similar services receive slightly differing funding levels.

We encourage providers to:

• manage payments throughout the year to ensure costs are covered during months of lower charged hours
• balance payments across services throughout the funding period
• consider seasonal fluctuations when allocating any additional amount above the wage increase, and associated on-costs, to their workers.

Providers must maintain appropriate records to ensure compliance with the grant reporting requirements.

Under compensation

There may be a small number of services that:

• provide a unique service offering outside the scope of the standard payment calculation
• believe they are not receiving enough funding.

Providers of these services may apply for a funding review. We outline how to do this in the next section.

Providers must smooth funding across their services before requesting a funding review.

Standard payments are made in arrears every 4 weeks. For example, a payment made in January 2025 will relate to the December 2024 period.

Top up payments are made in arrears quarterly. For example, a payment made in March 2025 could relate to the period 2 December 2024 to 28 February 2025 (subject to the provider’s eligibility).

One-off historical leave liability payments will generally be paid around 2 to 7 days before a provider’s first payment.

Transferring a service

If you transfer a service to another provider, you will stop getting funding for that service.

You will continue to get funding for your other eligible services. If you don’t have any other eligible services, we will terminate your grant agreement.

If you transfer the service to a provider who does not get the worker retention payment, the service will not be eligible unless the provider applies for the funding.

Acquiring a service

If you acquire a service from another provider, you can get the worker retention payment for that service if it meets the conditions of your grant agreement. This includes the fee growth cap. We check service fees regularly to ensure compliance.

What you need to do

In both cases, you must tell us about the change. You can do this by emailing ccshelpdesk@education.gov.au.

We will send you a grant variation to reflect the change.

You must also comply with your Child Care Subsidy approval obligations when buying or selling a service.