Early childhood wages

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.

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.

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.

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.

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.

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.

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 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.