Early childhood wages

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

Applications will open next week. Providers can apply at any time before 30 September 2026. 

We understand for some providers meeting certain conditions, like having a workplace instrument, may take time. We will backdate payments to 2 December 2024 for providers that:

• apply by 30 June 2025
• meet the eligibility criteria from 2 December 2024. 

First regular payments will be made in January 2025. 

Providers may be given an opportunity for a payment in December 2024. This is not an additional payment. If provided, it will be reconciled when the regular payment cycle commences in January 2025.

The payment will be conditional on providers:

• limiting fee growth
• engaging workers through a workplace instrument that meets grant conditions
• passing all funding on to eligible workers through increased wages.

If a provider breaches these conditions, we may:

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

Limiting fee growth

To get the payment, providers must limit fee increases. Providers cannot increase service fees annually by more than a set percentage for 2 years.

Between 8 August 2024 and 7 August 2025, this percentage is 4.4%.

The percentage that will apply from 8 August 2025 will be determined by a new ECEC cost index to be published by the Australian Bureau of Statistics (ABS).

Application for variation

Providers may request an alternative fee growth cap in exceptional circumstances.

This is only available where providers can demonstrate that the standard restriction on fee growth would seriously impact the financial viability of the service.

Once grant the grant opportunity opens, providers will be able to submit a request for an alternative fee growth cap, including information to show the standard fee growth restriction would seriously limit their financial viability.

Monitoring fee growth

We will monitor fee growth for all services getting the payment.

We will contact providers of services we identify may be breaching this condition, which if substantiated may result in funding being terminated for the services that breached the condition.

New services

Services that open after 8 August 2024 can set an initial service fee. The fee growth cap will then apply to this fee.

Additional costs

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.

Inclusions like nappies and meals are:

• subject to the fee growth cap if included in your reported fees
• excluded from the fee growth cap if charged as extras and not part of your reported fees.

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 return 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.

Workplace instruments

A workplace instrument sets out terms and conditions of employment, like:

• pay rates
• penalties and loadings
• working hours
• leave entitlements.

Workplace instruments are legally binding. They provide assurance that funding is being passed on to workers through increased wages.

Workplace instruments can be negotiated through a bargaining process.

To be eligible for the worker retention payment, a workplace instrument must:

• include an obligation to pay workers at or above the minimum rates in the grant guidelines and in accordance with section 4.3 of the grant guidelines
• apply for the full 2 years of the payment.

There will be no exemptions to this condition.

Find out more about award wages, workplace instruments, and bargaining.

Passing funding onto workers

The payment must be:

• passed on to eligible workers as wages
• used to pay 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, even if you already pay above award rates
• 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.

Eligible on-costs

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

Providers must use the payment on increased wages first. You may only use funding for eligible on-costs once all eligible employees have been paid the minimum rates in the grant guidelines.

The eligible on-costs are:

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

An online application form will be available soon.

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

You can submit a single application for up to 100 services. If you have more than 100 services, you will need to submit multiple applications.

We will make payments through the Child Care Subsidy System. Please ensure your bank account details are up to date via the Provider Entry Point or your third-party software.

Payments will be made in arrears every 4 weeks. We expect payments will be made 3 to 6 weeks in arrears, but may be up to 2 months. This will be reliant on a service’s session reporting schedule.

The amount paid each month will be calculated based on a number of factors, including the hours of care provided by a service each month. 

We will provide more information about payments soon.