Update: Funded educator wage increases – Where do we stand and what do we know?

Almost a month after the Australian Government’s announcement that it would fund a 15 per cent increase in educator wages, information designed to support approved providers and educators to prepare for the historic change is becoming increasingly available. 

 

This article aims to capture the information publicly available on the matter and in so doing offer early childhood education and care (ECEC) stakeholders a roadmap, with context, to help them navigate the process.  

 

It will aim to build on a previous “what do we know so far” article released in the wake of the announcement. 

 

Has anything materially changed since the initial announcement? 

 

No, the core of the original announcement is in place. 

 

The Government has committed to fund a 15 per cent pay increase, now known as a worker retention payment, for a select group of early childhood and outside school hours care (OSHC) educators. 10 per cent will be passed in December 2024 and a further 5 per cent in December 2025.

 

The increase will be paid by approved providers as part of normal payroll processes, but will be funded via a grant received from the Commonwealth Government. 

 

Access to the grant funding will be contingent on providers agreeing to cap fees by a fixed amount over a 12 month period and engaging staff with a workplace instrument, also known as an enterprise agreement. 

 

Do we have any further detail on who is eligible to receive the payment?

 

Yes, we now have a clear understanding of the full range of employees that are eligible for the payment, and notably it is not just educators. 

 

At a high level eligible ECEC workers will receive the pass through payment if:

 

1. They work at an eligible CCS approved long day care centre or outside school hours care service that opts into the payment, and;

 

2. They are covered by either the Children’s Services Award 2010, the Educational Services (Teachers) Award 2020 or a state-based ECEC award;

 

3. Or they undertake the duties included in the Children’s Services Award 2010 and the Educational Services (Teachers) Award 2020.

 

Importantly, this means that not only teachers, educators, and room leaders will be covered by the payment but also cooks, coordinators and support workers are potentially eligible too. 

 

What about employees already being paid above award?

 

Employees that are paid above award are also eligible, but the grant amount for them is calculated as 15 per cent above their Award rate, and not their above award rate. 

 

Will on-costs be covered too?

 

Yes, the Government has committed to paying on on-costs and has specifically called out superannuation and leave liabilities, but little detail other than that is available so we do not know if this covers payroll tax (a state based charge) as well. 

 

What about the fee caps for providers? What is the current status of this condition?

 

The basic premise of the fee cap remains, in that in exchange for accessing the funding a provider must agree to limit fee increases for the duration of the two year grant program. 

 

When does the rate capping period begin?

 

It has already started. 

 

Between 8 August 2024 and 7 August 2025, a provider cannot raise their fees more than 4.4 per cent, a level determined by what is now referred to as the ECEC Cost Index, a newly published metric from the Australian Bureau of Statistics.

 

The ECEC Cost Index will be updated annually. 

 

When applying for the payment, providers must submit a Notice of Charged Fees. This acts as a reference point from which the Government will measure adherence to the fee increase rules. 

 

Are there any exemptions available?

 

Notably, yes. 

 

The Department of Education has confirmed that exemptions from adhering to the rate cap limit may be extended to services in exceptional circumstances. 

 

An exemption may apply only to providers that can demonstrate fee growth is essential to ensure their financial viability. 

 

What about the workplace instrument? What is this? And what does it mean? 

 

A workplace instrument is a legal term to describe a document that sets out the terms and conditions of employment in a place of work. 

 

They include:

 

• pay rates that reflect the wage increases
• penalties and loadings
• working hours
• leave entitlements

 

Each approved provider will need to have a tailored workplace instrument that captures their place of work payment and employment practices, including a commitment to pass on the full worker retention payments to employees, and is extended to employees across the board. 

 

Is a workplace instrument the same as an employment contract? 

 

The answer to this question is a matter of legal definitions but in short having a workplace instrument in place does not preclude the need for individual contracts for employees. 

 

They both can co-exist. 

 

Why do approved providers need  a workplace instrument?

 

Workplace instruments are legally binding. 

 

The legal nature of the agreement gives the Department of Education assurance that funding will be passed on by approved providers to their workers as higher wages and also gives them recourse to take legal action if providers do not pass the funding on in the form of higher wages. 

 

Where do approved providers get a workplace instrument from?

 

Workplace instruments are legal documents and so members of the legal profession with expertise in workplace and fair work law can help organisations craft these documents which come in a number of different forms: 

 

• a single enterprise agreement
• a multi-enterprise agreement
• an Individual Flexibility Arrangement

 

It is understood the Department of Education will be providing advice on this area soon, but at the moment, there is little guidance other than definitions available. 

 

When will the grant applications open?

 

Grant applications are expected to open in October 2024, with the wage increase taking effect from December 2024.

For more detail and guidance please visit the Department of Education’s website here.