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 additional 20% funding for eligible on-costs (calculated against your base funding).
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 05/03/2025
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 (calculated against your base funding).
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 in the circumstances outlined below.
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 (IHC) providers are not currently eligible for this payment. The government is working closely with these sectors to learn how best to support their workforce. Thank you to all who have provided input and valuable perspectives on behalf of these sectors so far. The government is considering next steps and will provide further information shortly.
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
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. Services should work with their labour hire agency to determine how funding will be passed on to workers hired through these agencies and update their contractual arrangements.
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.
Services should request evidence showing that funding has been passed on to workers. This evidence could be part of the contract terms or a formal declaration from the agency.
Providers must show that funding was used in line with these conditions in their annual reporting.
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.
A workplace instrument will not be compliant if it excludes the above amounts from calculations of:
- penalties
- loadings
- termination payments
- payments while on leave
- superannuation.
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.
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 aim to check your eligibility within 2 months of receiving your complete and accurate application.
After we confirm your eligibility, your application will continue to the next stage of assessment. We aim to assess each application as quickly as possible.
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.
Backdating payments
We understand meeting certain conditions, like having a workplace instrument, may take time.
We will backdate payments for providers who:
- submit a complete application by 30 June 2025
- meet the eligibility criteria from 2 December 2024.
We will backdate payments to:
- 2 December 2024, for workplace instruments that cover the full grant period even if adopted later
- the date the workplace instrument starts, if this is after 2 December 2024.
Some providers may attempt to form or join a workplace instrument before 30 June 2025, but may not be approved until after the deadline. In this scenario, we may backdate payments provided you submit a complete application by 30 June 2025 that indicates you are awaiting approval.
Scenario 1: workplace instrument covers full grant period
Provider A adopts a compliant workplace instrument on 28 February 2025. The workplace instrument is backdated to 2 December 2024. Provider A submits a complete application on 3 March 2025 and meets the eligibility criteria from 2 December 2024. Since the workplace instrument covers the full grant period, payments will be backdated to 2 December 2024.
Scenario 2: workplace instrument starts after 2 December 2024
Provider B adopts a compliant workplace instrument that starts on 28 February 2025. Provider B submits a complete application on 3 March 2025 and meets the eligibility criteria from 2 December 2024. In this case, payments will be backdated to 28 February 2025, the date from which their workplace instrument applies.
Scenario 3: provider applies to join ECEC multi-employer enterprise agreement before 30 June 2025
Provider C applies to join the ECEC multi-employer enterprise agreement in June 2025 but is not approved by the Fair Work Commission (FWC) until July or August 2025. Provider C submits a complete application on 28 June 2025 and meets the eligibility criteria from 2 December 2024. Provider C indicates that they are awaiting an outcome from the FWC in their application. In this case, payments will be backdated to 2 December 2024.
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 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.
How to request a funding review
The funding review process allows us to support unique providers for whom the standard payment calculation method is not appropriate.
Who can get a funding review
A provider must be approved for the worker retention payment and smooth funding across services before requesting a funding review.
The provider must operate services that:
- have a unique staffing profile, or
- have stand-alone jurisdiction-funded preschool rooms, or
- are First Nations, remote/ or very remote, or
- get the Community Child Care Fund and have a unique operating model or
- cannot be provided consistent and smoothed funding by the provider across a financial year.
How to apply
If you meet the above criteria, contact ccshelpdesk@education.gov.au to request a funding review.
We will give you access to an application form in SmartyGrants. The application must be completed by a person with management or control.
The application will ask for the following details:
- identifying information such as:
- worker retention payment application ID
- provider details
- service details
- PMC details.
- information and evidence demonstrating you would be under compensated under the standard payment calculation on an ongoing basis
- proposed commencement date.
Evidence demonstrating under compensation could include:
- information about your organisation structure
- financial statements
- any other information we request.
If your application is approved:
- we will issue a variation to your grant agreement
- you will still get your standard payment every month
- some or all of your services will get a top up payment every quarter
- if required, your top up payments will be based on employee data
- you will have additional reporting requirements.
Applications submitted by 31 July 2025 may receive top up payments backdated to the date the provider became eligible for the worker retention payment. Applications submitted after this will be backdated to the start of the previous reporting period.
Top up payments and reporting obligations
We will use employee data to calculate your top up payments.
To ensure accurate top up payments, you must provide the following information quarterly:
- the number of eligible workers at the services included in the funding review stream
- the award classification level of each worker
- the total hours worked for each worker.
You must provide this information via SmartyGrants by the deadlines outlined below.
| Reporting period | Reporting deadline |
| 2 December 2024 – 28 February 2025 | March 2025 |
| 1 March 2025 - 31 May 2025 | June 2025 |
| 1 June 2025 - 31 August 2025 | September 2025 |
| 1 September 2025 - 30 November 2025 | December 2025 |
| 1 December 2025 - 28 February 2026 | March 2026 |
| 1 March 2026 - 31 May 2026 | June 2026 |
| 1 June 2026 - 31 August 2026 | September 2026 |
| 1 September 2026 – 30 November 2026 | December 2026 |
When we make payments
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.
How we make payments
We make payments at the service-level through the Child Care Subsidy System.
We send payments to the same bank account as your CCS payments.
Payments are 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.
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.
Workplace instruments, awards and supported bargaining
Learn more about awards, workplace instruments and bargaining.
Communication toolkit
Let your community know you’ve signed up to the worker retention payment or share information about the payment.
Get help
Help is available to engage with the worker retention payment. Search our directory to find support that meets your needs.
What happens next?
The worker retention payment is an interim measure while the Fair Work Commission (FWC) finalises its gender undervaluation priority awards review.
Gender undervaluation proceedings
The FWC’s review is currently considering wages in the Children’s Services Award 2010.
As stated in the guidelines, the worker retention payment has been designed to account for the outcomes of the review. Specifically, if the Children’s Services Award 2010 wages:
- Increase by less than the amount provided by the worker retention payment – the amount you must pay above award will reduce by an amount equivalent to the award increase. For example, if the award increases by 6%, employers will still need to pay 4% above the award until 1 December 2025.
- Match the amount provided by the worker retention payment – the award can serve as a compliant instrument for the purpose of eligibility. The review is not considering the Educational Services (Teachers) Award 2020. You will still need an alternative compliant workplace instrument for workers covered by this award.
- Exceed the amount provided by the worker retention payment – the minimum rates in the guidelines will be replaced with the new award rates.
We are monitoring the proceedings closely and will make any necessary changes quickly.
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