The Australian Government will fund a wage increase for the early childhood education and care (ECEC) workforce through a worker retention payment.
On this page:
Overview
We’re funding a wage increase for the ECEC workforce through a worker retention payment. The payment runs for 2 years and will fund:
- a wage increase of 15% above the modern award rates
- a minimum of 20% of eligible on-costs.
Providers opt-in by applying for the payment. The payment will be issued to eligible providers through a grant agreement and delivered via the Child Care Subsidy System. Providers must pass the payment on to eligible ECEC workers.
Applications are open.
Key dates
Applications open
8 October 2024
Webinar
We held a webinar on 10 October 2024. The recording is no longer available following updates to the grant guidelines.
Wage increase takes effect
2 December 2024
Payments start
January 2025
Applications close
30 September 2026
Payments end
30 November 2026
Guidelines Updated 22/11/2024
Download the grant guidelines on GrantConnect.
Read a summary of the grant guidelines below.
About the payment
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.
The payment is calculated on the current national award rates. These were updated on 1 July 2024 following the Fair Work Commission’s annual wage review.
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 to 2 December 2024 for providers who:
- apply by 30 June 2025
- meet the eligibility criteria from 2 December 2024.
Who can get the payment
Eligible providers may apply for the worker retention payment.
To be eligible, providers must:
- be approved for Child Care Subsidy (CCS)
- operate Centre Based Day Care (CBDC) or Outside School Hours Care (OSHC) services
- engage workers through a workplace instrument that meets grant conditions
- limit fee growth by a set percentage from August 2024
- agree to pass funding on to all eligible workers through increased wages.
We provide more details about these requirements and conditions below.
Family Day Care (FDC) and In Home Care (IHC) providers are not currently eligible for the payment. The government is working closely with these sectors to learn how best to support their workforce.
Preschools and kindergartens are not eligible for the payment.
Who the payment covers
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 agencies
Workers engaged through labour hire agencies are not explicitly excluded from a wage increase.
Whilst participating employers must be CCS approved, in this scenario, the service could engage with the labour hire agency to discuss the possibility of increasing wages for labour hire workers in line with workers who are directly engaged.
Pay increases could be managed between the employer and labour hire agency. This would ensure that all funding is passed on as wages and meets the policy intent that all workers covered by the awards or who are undertaking duties described under the awards receive a wage increase.
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.
Engaging workers through a workplace instrument
You must engage workers through a workplace instrument that meets grant conditions.
A workplace instrument is a document that sets out terms and conditions of employment. It’s a legally enforceable agreement between employers and employees.
To be compliant with grant conditions, the workplace instrument must:
- include an obligation to pay workers at least 10% above current award rates
- provide for an additional 5% above applicable award rates from 1 December 2025
- apply until at least 30 November 2026.
See the minimum rates that you must pay all eligible workers and include these in your workplace instrument.
We will assess whether a particular workplace instrument is compliant and meets grant conditions on a case-by-case basis.
To be eligible for the worker retention payment, you must take all reasonable steps to engage all eligible workers under a workplace instrument that complies with grant conditions.
You must provide information to all eligible workers on the types of compliant workplace instruments.
GrantConnect now includes a factsheet on workplace instruments. You are to provide this information to your employees.
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 engaged under a compliant workplace instrument
- you can show you have taken all reasonable steps to engage all workers under a compliant workplace instrument.
You must comply with the terms of the workplace instrument. This is a condition of the worker retention payment. It provides assurance that the payment is being passed on to eligible workers through increased wages.
Find out more about award wages, workplace instruments, and bargaining.
Limiting fee growth
You must limit fee growth by a set percentage from August 2024. 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.
The percentage that applies from 8 August 2025 is guided by a new index developed by the Australian Bureau of Statistics. It’s called the Childcare Services Cost Index. It measures changes in prices paid by providers for the goods, services and labour they buy to deliver child care. The 4.2% fee growth cap uses the average of the latest two quarters from the new ABS index.
We will monitor fee growth. If we think you are breaching this condition, we:
- will contact you
- may terminate your payment.
Requesting an alternative fee growth cap
You may request an alternative fee growth cap for one or more services in exceptional circumstances.
You must be able to demonstrate that the standard fee growth cap would seriously impact a service’s financial viability. For example, if it would result in a reduction or drop in the service’s offerings.
You can submit a request for each impacted service:
- while completing your grant application, or
- separately at any time.
You will need to provide each service’s:
- current and proposed fees schedule, including for different times and cohorts
- financial information like current and anticipated revenue, expenditure and profit/loss information.
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
Services that open after 8 August 2024 can set an initial service fee. The fee growth cap will then apply to this fee.
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.
Passing on payments
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.
In practical terms, this means that workers on the same award and level should receive at least the same wage increase in dollar terms, regardless of whether they are paid at or above award rates.
For example, Sofia works as a Children’s Services Employee (Level 3.1 classification) under the Children’s Services Award 2010. She is paid the current minimum hourly rate of $27.17. Aisha works under the same classification and award. She is paid above the award rate and gets $30 per hour. Both Sofia and Aisha must receive a pay increase of at least $2.72 per hour.
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
You can apply for a one-off payment for accrued historical leave liabilities that increased because of the wage increase.
Eligible historical leave liabilities are:
- long service leave
- annual leave plus any loadings applicable
- personal/carer’s leave.
The payment will cover 70% of the ‘top-up amount’. This is the increased cost incurred as a result of the wage increase applying to historical leave liabilities accrued before:
- 2 December 2024, or
- your application date.
This percentage represents a reasonable contribution from the Commonwealth. It acknowledges that not all leave types are actually incurred as costs to a provider. For example, when historical leave liabilities are accrued but not taken or not paid out when a worker resigns.
You can apply for this one-off payment in your grant application. You can only apply regarding the services included in your application. You must apply by 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
- 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.
Reporting requirements
Providers who get the payment must report information to the department.
Workplace instrument declaration
You must provide a declaration confirming you have given all eligible workers information about the types of compliant workplace instruments.
You must provide this declaration within 90 days of the executing the grant agreement.
Annual declaration and financial statement
You must complete an annual declaration and financial statement.
This comprises:
- a declaration confirming you have used all funding in line with the grant conditions
- a financial statement including total expenditure on wages and on-costs.
We will let you know when reporting templates are available.
Change of circumstances
You must tell us if any of the following change:
- the addition of a new service or removal of an existing service from the provider
- a change in director or owner of the provider
- the transfer of a service from one provider to another.
You must report these changes to CCShelpdesk@education.gov.au.
This is in addition to your regular CCS reporting requirements.
How to apply
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.
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.
See our guide with everything you need to know to apply for the payment.
How we assess applications
We assess applications against the eligibility criteria and conditions stated in the guidelines.
Before we consider your application complete, we may:
- seek further information from you about it
- ask you to confirm or correct information in it.
We will assess completed applications within 2 months of receipt. We aim to assess each application as quickly as possible.
If we identify errors or omissions in your application, we will contact you. Your application may not be considered complete and accurate until we receive this further information.
We will advise you of the outcome of your application in writing. All application decisions are final.
All successful applicants will be listed on GrantConnect.
Entering into a grant agreement
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.
How we make payments
We will make payments at the service-level through the Child Care Subsidy System.
We will send payments to the same bank account as your CCS payments.
Payments will be labelled as the Worker Retention Payment.
Please ensure your bank account details are up to date via the Provider Entry Point or your third-party software.
When we make payments
Regular payments will start in January 2025.
Payments will be made in arrears every 4 weeks. For example, a payment made in January 2025 will relate mainly to the December 2024 period.
Providers who applied by 11 November 2024 may get an early payment in December 2024. This payment will be approximately half of a regular monthly worker retention payment.
This early payment is not an additional payment. If provided, it will be reconciled when regular payments start in January 2025. This means a provider who receives a worker retention payment in December 2024 will have their payment in January 2025 reduced by the amount they received in December 2024.
Historical leave liability one-off payments will generally be paid around 2 to 7 days before a provider’s first monthly payment.
How we calculate payments
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 from 2 December 2024
- an additional 5% wage increase for all eligible staff from December 2025
- a minimum of an additional 20% funding, calculated against the wage increase, for on-costs.
If your service isn't sufficiently funded to deliver the wage increase on an ongoing basis, you can apply for a funding review. If found eligible, you will get extra funding.
Providers with multiple services should smooth funding across their services before applying. An ongoing need for a review must be demonstrated.
Accounting for seasonality
Many services experience seasonal fluctuations in their charged hours of care and staffing levels.
We may adjust funding for Centre Based Day Care providers 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 then be recovered via reduced payments from August to October. This helps balance monthly payments over each 12-month period.
Providers with multiple services may experience months where similar services receive slightly differing funding levels.
We encourage providers to:
- manage payments received throughout the year to ensure costs are covered during months of lower charged hours
- consider seasonal fluctuations when allocating any additional amount above the wage increase, and associated on-costs, to their workers
- consider implementing internal processes to balance payments across services throughout the funding period.
Providers must maintain appropriate records to ensure compliance with the grant reporting requirements.
Service profiles
Payment amounts will vary between services. The below examples illustrate potential funding amounts based on different service profiles.
Service profile 1
I operate a Centre Based Day Care service. I employ 24 eligible workers. For every paid staff hour, my service charges 4.7 CCS session hours. This means that I operate at a ratio of one eligible worker for every 4.7 children. The funding calculation considers this as 4.7 CCS session hours for every paid staff member. The average hourly award rate across my staff is $33.48.
This service will receive funding to support the full 10% wage increase on the modern award rates, with over 20% additional funding for on-costs.
Service profile 2
I operate a Centre Based Day Care service. I employ 10 eligible workers. For every paid staff hour, my service charges 4.2 CCS session hours. This means that I operate at a ratio of one eligible worker for every 4.2 children. The funding calculation considers this as 4.2 CCS session hours for every paid staff member. The average hourly award rate across my staff is $30.22.
This service will receive funding to support the full 10% wage increase on the modern award rates, with over 20% additional funding for on-costs.
Service profile 3
I operate a Centre Based Day Care service. I employ 24 eligible workers. For every paid staff hour, my service charges 3.9 CCS session hours. This means that I operate at a ratio of one eligible worker for every 3.9 children. The funding calculation considers this as 3.9 CCS session hours for every paid staff member. The average hourly award rate across my staff is $30.06.
This service will receive funding to support the full 10% wage increase on the modern award rates, with 15% additional funding for on-costs.
Service profile 4
I operate an Outside School Hours Care service. I employ 15 eligible workers. For every paid staff hour, my service charges 9 CCS session hours. This means that I operate at a ratio of one eligible worker for every 9 children. The funding calculation considers this as 9 CCS session hours for every paid staff member. The average hourly award rate across my staff is $31.15.
This service will receive funding to support the full 10% wage increase on the modern award rates, with over 20% additional funding for on-costs.
How to request a payment review
We use a range of information to determine funding for each service.
The funding 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.
There may be a small number of services that:
- provide a unique service offering outside the scope of the funding calculation
- believe they are not receiving enough funding.
Providers will be able to apply to have funding reviewed for these services. We will consider these requests on a case-by-case basis.
Providers will need to demonstrate an ongoing need for an adjustment to their funding.
We encourage providers to observe their funding over an extended period. Funding is likely to balance and stabilise to account for seasonal fluctuations.
We will provide more information about seeking a funding review in early 2025.
Download guidelines
Resources
Application guide
See our guide with everything you need to know to apply for the worker retention payment.
Minimum rates
See the minimum rates for the worker retention payment.
Awards, workplace instruments and bargaining
Learn more about awards, workplace instruments and bargaining.
Stakeholder kit
We encourage organisations that support the sector to share the information in this kit.
What happens next?
The payment is an interim measure while:
- the Fair Work Commission finalises its gender undervaluation priority awards review
- the government considers the Australian Competition Consumer Commission (ACCC) and Productivity Commission (PC) reports to help chart a course for universal ECEC.
The government will consider longer-term funding arrangements as part of its response to the ACCC and PC reports.
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