Worker Retention Payment for Early Childhood Educators
- OWNA
- Apr 16
- 5 min read
For some time now, a big barrier to getting educators into the workforce and retaining them has been the conversation around remuneration. Recognising this, the Australian government has developed an initiative called the ECEC Worker Retention Payment.
Early childhood educators are vital to the community, and missing out on quality education and care due to lack of pay would be a disaster.
Let's dive into what the worker retention payment is, how it works and what you need to do as a provider.
What is the ECEC Worker Retention Payment?
The Worker Retention Payment for Early Childhood Education and Care (ECEC) is designed to help employers retain staff by supporting a 15% wage increase split across 2 years. This is split into 2 parts:
10% increase from December 2024
further 5% increase from December 2025.
For educators to receive their payments, educators must be within an organisation that is eligible and has opted into the Worker Retention Payment scheme. Employers will then receive the payment through the Child Case Subsidy System (CCSS) and pass this onto staff.
Grant Eligibility
Provider Eligibility
To be eligible to receive and pass on the Worker Retention Payment, approved 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 increases to a set percentage from August 2024
agree to pass funding on to all eligible workers through increased wages.
For the limit to fee increases, services can only increase fees by the following amounts:
4.4% between 8 August 2024 and 7 August 2025.
4.2% between 8 August 2025 and 7 August 2026.
Staff Eligibility
The payment covers all 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.
Eligible ECEC workers 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.
Workplace Instruments
All employees - whether full-time, casual or part-time - must be engaged by a workplace instrument.
A workplace instrument is a legally enforceable document that sets out the terms and conditions of employment, like:
pay rates
penalties and loadings
working hours
leave entitlements.
Awards are the most common form of workplace instrument in ECEC. They set out the minimum pay rates and conditions of employment in a specific industry.
There are 2 primary modern awards that cover the ECEC workforce:
Children's Services Award 2010, which covers educators
Educational Services (Teachers) Award 2020, which covers early childhood teachers.
Other kinds of workplace instruments include enterprise agreements or the ECEC supported bargaining agreement. For more information on workplace instrument, visit Fair Work.
How the Worker Retention Payment is Calculated
The worker retention payment can be calculated a few different ways. They are:
Standard Payments
The standard payment calculation is the most common, and 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.
The department adjusts 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, balancing monthly payments over 12 months.
Smoothing Payments
Providers with multiple services may experience months where similar services receive slightly differing funding levels.
Providers should:
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.
In this case, poviders 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 can apply for a funding review, but must smooth funding across their services before requesting a review.
How the Worker Retention Payment is Distributed
Payments are made at the service-level through the CCSS, and will be labelled 'Worker Retention Payment'. They will be distributed in the following ways:
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.
Payments can be backdated in the following scenarios:
submit a complete application by 30 June 2025
meet the eligibility criteria from 2 December 2024.
The department will backdate payments to:
the date the workplace instrument starts, if this is after 2 December 2024.
2 December 2024, for workplace instruments that cover the full grant period even if adopted later
Reporting Requirements for the Worker Retention Payment
Providers who get the payment must report information to the department, in addition to CCS reporting. The reporting requirements include:
Workplace Instrument declaration
You must provide a declaration confirming you have given all eligible workers information about the types of compliant workplace instruments within 90 days of the executing the grant agreement.
Annual declaration and financial statement
You must complete an annual declaration and financial statement which 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.
Change of circumstances
You must tell the department 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.
How to Apply for the Worker Retention Payment
Providers can apply for the worker retention payment via the online application form, and can submit a single application for up to 100 services. If providers have more than 100 services, they will need to submit multiple applications.
What Next?
As funding is distributed through the CCSS to services, and then through payroll to educators, most providers will have to use multiple software platforms to manage the Worker Retention Payment.
Those that use OWNA don't.
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