Guidelines For 15% Wage Increase

The Australian Government will support a 15% wage increase for the early childhood education and care (ECEC) workforce through a worker retention payment. The payment will support a wage increase of 15% above the modern award rates over 2 years. The following provides information on Eligibility, Conditions, Workplace Instruments and more. 

Eligibility

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
• meet the grant conditions and reporting requirements outlined below.

The payment will cover eligible ECEC workers who:

• work at an eligible CCS-approved CBDC or OSHC 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 and support workers.

Who is not eligible

Family Day Care (FDC) and In Home Care (IHC) providers are not currently eligible for the worker retention payment. The government is working closely with FDC and IHC sectors to learn how best to support their workforce.

Preschools and kindergartens are not eligible for the payment.

Conditions

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).

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.

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.

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.

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.

Further Reading

Childcare Wages In Australia
Levels For Childcare Wages
Early Childhood Teachers (ECT) Award Wages

For more detailed information: Worker Retention Payment