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Unpacking the “Worker Retention Payment” Grant guidelines – A Providers Perspective
Jason Roberts
Oct 07, 2024
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The Department of Education has released grant guidelines for the early childhood education and care worker retention payment.
The guidelines provide the first glimpse of some important aspects of the grant from structure, process, timeline and requirement perspectives.
This article will look to step through the guidelines with a view to supporting approved providers to broaden their understanding and navigate the upcoming application process.
So, at a high level what additional information has now been released?
On 1 October 2024 the Department of Education, via the GrantConnect platform, released a document titled “Early Childhood Education and Care Worker Retention Payment Grant Opportunity Guidelines.”
The document is not publicly available on the Department of Education website.
To access it approved providers will need to log in or register on GrantConnect and then navigate to the grant page where it is located.
What is in the guideline document?
The document provides information on the grant opportunity with particular reference to who can apply for it, how the grant is calculated, key timelines, what the grant can be used for and how to apply as well as information on the selection process and notification of outcomes.
Did anything really stand out?
Yes, there were a few things that were notable.
Firstly, how the grant will be calculated.
Importantly, the determination of the grant for a particular service will not be calculated via a “claim and acquit” process ie: hours worked and rates paid are submitted by the employer (the claim) and then the “retention payment” calculated as 10 per cent of the sum of the two inputs is paid (the acquit).
Instead, the Department of Education has opted for a “top down” approach whereby it calculates, using a set of proprietary inputs, a “retention payment per hour” dollar amount and then uses this as the basis to calculate the retention payment by multiplying it by the chargeable hours of early learning a centre delivers in a given period.
The chargeable hours will be sourced from CCS data.
Is this “retention payment amount per hour” available to the public yet?
No, not yet.
This is a crucial piece of the puzzle and as it stands it has not been released.
Why is it so important?
It’s super important because the dollar value will determine how much retention payment a provider will actually receive in a given period. It is essentially the value piece of the equation with the chargeable hours being the volume piece and when they are combined equals the total payment.
Does that mean payments are being calculated without actual hours worked data?
Yes, that’s right.
The Department is essentially estimating the worker retention amount based on its own calculations and using it as a benchmark for everybody.
And by extension does that mean there is a risk of mismatches occurring?
Yes, absolutely.
This will always be the case with a “top down” calculation model that isn't anchored in actual costs.
The Department’s “retention payment dollar rate” calculation is based on a hypothetical roster that may or may not be highly qualified, may or may not have extra programming time and may or may not be lean etc etc.
Only the Department will know what this standard roster looks like and it is highly unlikely given the diversity of management styles across the early learning sector it will align with any particular centre.
As a result the worker retention payment will always be a best guess of sorts and therefore runs the risk of not matching the actual retention payments required.
So what happens if a centre receives a retention payment that doesn’t cover its costs?
Providers can seek a review of their funding level where they can show, with evidence, they are not receiving adequate funding. In these circumstances, Providers need to contact ccshelpdesk@education.gov.au with their claim and it will be processed.
If validated they will receive a top up.
And what happens if they receive more funding than required?
The Guidelines do call out that “funds cannot be used for any other purpose, even if funds are provided in excess of the minimum amount required to cover the mandatory payments” in the section that covers “eligible expenditure.”
However, no Guidelines have been outlined as to how providers attend to overpayments should they occur.
Ok well, surely the dollar retention payment amount is essential for providers to know before they sign up?
Yes, absolutely, and its absence in the guidelines was a real standout.
It is not clear when it will be provided, but once it has been, providers can very quickly work out whether they are in the underpaid or overpaid bucket and make business decisions accordingly.
When is this due to be released?
We don’t know quite yet. This is not mentioned in the Guidelines.
Great, so what else is of importance in the guidelines?
The other really important standout was more specific information about the “workplace instrument” providers will need to have in place prior to application.
Can you remind me what this is?
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 and along with a commitment to cap fees at 4.4 per cent is one of the two key criteria for application.
For the purposes of the worker retention award it must include:
- A commitment by the approved provider to pay workers either at or above the relevant minimum rates that reflect the wage increases and;
- that they must be paid for the full duration of the grant period.
The document itself may take a couple of different forms, either an enterprise agreement (EA) or an individual flexibility arrangement (IFA) with the latter being a simpler alternative for providers to use.
With regards to the EA, are these the only two requirements within it?
Yes, they are.
The wording suggests that the document will need just two conditions namely, a commitment to pass on the payment to employees and a commitment to do so for the duration of the grant period.
That being said, the EA will still need 51 per cent of workers to approve it but at a high level the Department clearly concluded that a simple EA is preferred over a more complex one.
And with regards to the IFA?
Yes, all IFAs must include the same two conditions but given these are agreements directly between employers and their individual employees the process is more straightforward than a collective agreement like an EA although for the purposes of the grant application they are considered the same.
Where do I find examples of these documents?
The Fair Work Ombudsman’s website here has a useful page with directions to an archive of EAs and here for an archive of IFAs that can be accessed.
Was there anything else of note in the guidelines?
Yes, additionally the Department has included a schedule, called Schedule A - Minimum Rates, that lists out the extra dollar per hour amount payable for each classification in the relevant awards.
For example, it stipulates that a Level 3.1 Certificate III educator on commencement will earn $29.89 per hour from 2 December, an increase of $2.72 on the old rate of $27.17 with $2.72 being the retention payment.
And a Level 4.1 Diploma qualified educator on commencement will earn $31.89 per hour, an increase of $2.90 on the old rate of $28.99 from 2 December with $2.90 being the retention rate.
The schedule acts as a useful reference point for all approved providers by providing clear examples of exactly how much extra pay their team members will be receiving.
Additionally, it can be used to “forecast” what their “worker retention payment” amount should be and can then be used as a reference point to compare against what the actual dollar value from the Government is once the dollar amount per chargeable hour has been received.
And what about on-costs? How are these being accounted for?
The Guidelines do refer to on-costs but not in a specific way.
They note, “any funds provided by this grant must first be expanded on supplementing wages for eligible ECE workers. Only once all eligible ECEC workers have been paid at least the minimum rates specified in Schedule A can any remaining funding be used for eligible on-costs.”
Additionally, they state that there may be opportunities to use any residual funds to cover historical leave liabilities but consideration will only be given on a case by case basis.
Ok great, so what happens next?
The application gateway is now open for any approved provider who wants to proceed with their application. It will remain open for the duration of the opportunity from 8 October 2024 to 30 September 2026.
Do I have to apply immediately?
No. The timing of any application is at the discretion of the provider.
Given some key aspects of the Grant ie: the dollar value per chargeable hour to be received are not yet public it is understandable that some providers may elect to wait for additional clarity before signing up.
Should that be the case, the Guidelines do call out that if a provider submits an application date after the commencement of the program funding will be paid in arrears to 2 December 2024 assuming the workplace instrument in place stipulates that workers were paid the correct amounts from the specified date.
The cut off date for submissions in this regard is 30 June 2025.
And if I do apply, when will the payments start to flow?
Payments will be paid from January 2025 to December 2026.
To access the guidelines please register or log in here and to visit the Department of Education’s dedicated retention payment web pages click here.
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