Government boosts worker retention payment minimum on-cost commitment to 20%+

The Department of Education has issued an update for services intending to, or already engaged in, the Worker Retention Payment grant process, confirming that a minimum of an additional 20 per cent in funding will now be made available for on-costs for all services,  regardless of staffing profiles. 

This marks a shift away from previous commitments, as highlighted in Service Profile examples contained on the Department of Education website, in which some services, with specific staffing profiles, would receive a stated minimum of 15 per cent in additional funding to cover their worker retention payment on-costs. 

With on-costs, not including entitlements, tracking at close to 20 per cent of wage costs in most states and territories across Australia, 15 per cent funding would only partially cover the additional wage retention costs, and by extension raise concerns over funding adequacy amongst impacted providers and their services. 

To address this concern the latest update from the Department of Education states that that all services, regardless of configuration, will now receive “a minimum of an additional 20 per cent funding, calculated against the wage increase, to contribute towards eligible on-costs,” a move that will support those previously disadvantaged by the payment structure. 

These payments can be used towards the following eligible on-costs:

• superannuation contributions
• workers compensation insurance
• payroll tax
• employee entitlements
• leave loading

That being said, regardless of the new commitment, there is still a high probability that some services will be underfunded to a degree given that a minimum 20 per cent contribution will only serve to cover superannuation, payroll taxes and work cover in their entirety and not staff entitlement and loading costs as well. 

To cater for providers that are unable to meet their worker retention payment on-cost obligations via reimbursements the Department of Education has been very clear that there is a funding review process available.

Providers seeking to access this channel will need to demonstrate an ongoing need for an adjustment to their funding with the Department will review each submission on a case by case basis. 

Note: the Department of Education has yet to update the additional funding for on-costs percentage for Service Profile 3 in the “How we calculate payments” section of the website. It still states a minimum of 15 per cent. It is understood this will be updated to reflect the new commitment of a minimum of 20 per cent for all services stated in the “Funding” section.