An updated educator’s guide to the funded “Worker Retention Payment”

The Department of Education has released a new round of information to support providers in their efforts to apply for the “worker retention payment” that is due to commence in December 2024 and be passed on to their eligible employees. 

 

Much of the latest release focuses on the process that will need to be followed to be eligible to receive the grant payments from the Government. 

 

However, there is also a host of information relevant to educators who ultimately will be on the receiving end of these payments. 

 

This article aims to unpack details of the “worker retention payment” from an educators perspective and ultimately help support a better understanding of the processes at play as we approach the plan’s commencement. 

 

So, at a high level what pay increases are on the table?

 

All eligible early childhood education and care workers who work at an approved provider who has applied for, and subsequently been approved, to participate in the worker retention payment funding will receive a wage increase of 10 per cent on top of their current Modern Award wage. 

 

Assuming the provider continues to be eligible for the increase, an additional 5 per cent increase will be added twelve months later. 

 

And when is this due to start?

 

The first wage increase of 10 per cent will start on the first business day of December which will be 2 December 2024, with the second one of 5 per cent starting twelve months later in December 2025. 

 

Great, so are all ECEC workers automatically eligible to receive the funding?

 

Not quite. 

 

Firstly, educators need to be eligible to receive the funding with the following criteria called out: 

 

• Workers covered by the Children’s Services Award 2010 who work in long day care or outside school hours settings
• Workers covered by the Educational Services (Teachers) Award 2020 who work in CCS approved long day care or outside school hours settings
• Workers undertaking duties that are referenced by the two above awards but are not paid under it including those for example paid under a state based award. 

 

Trainees who are not paid under the Children’s Services Award 2010 or Educational Services (Teachers) Award 2020 are not eligible. 

 

Secondly, the worker must work for an approved provider who has opted into the funding program via a grant application that requires a set of specific criteria to be met. 

 

So what will providers need to do to get access to the funding?

 

There are two main requirements for providers to meet in order to participate in the program:

 

1. They must have in place at the time of application a legal document, called a “workplace instrument”, that sets out the terms and conditions of employment in a place of work. 

 

2. They must agree not to increase their fees more than 4.4 per cent between 8 August 2024 and 7 August 2025.

 

Ok, so what is a workplace instrument? And why are they important?

 

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. 

 

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 or an individual flexibility arrangement with the latter being a simpler alternative for providers to use.

 

They are important because an approved provider must have one in place before they can apply for the funding and once in place legally requires them to pass on any funding received. 

 

Do educators need to do anything regarding the workplace instrument?

 

That depends. 

 

If a provider is opting for an enterprise agreement then 51 per cent of educators at the centre will need to vote it in. However, if an individual flexibility arrangement is the chosen path then the provider will engage directly with the team member. 

 

Ok great, then what happens if a provider decides not to apply for the funding?

 

Approved providers are not legally obliged to apply for the worker retention payments. They can elect not to if they want. 

 

It is ultimately a business decision and different providers may have different views on whether to apply or not. 

 

Approved providers who are not willing to apply a workplace instrument and cap their fees will not receive the funding. 

 

Does that mean educators in these centres will not get a pay rise? 

 

Not necessarily, and it’s important to recognise this. 

 

Approved providers may opt out of the funding stream BUT may still elect to match the increases anyway using their own cash flows. 

 

Why would they do this?

 

There are a few scenarios where an approved provider may conclude that opting out of participating in the funding streams is in their organisations best interest with most decisions linked to how much value a provider places on retaining control of their fee increase amounts relative to the cost of increasing their teams wages and the funding amounts on offer. 

 

That being said, a non opt-in provider would still more than likely be compelled to raise wages because if they did not their team would resign and move to a provider in the community that has opted in to the funding streams and is offering the higher wages.

 

This mechanism more or less underwrites the probabilities that educators will receive the wage increases regardless of where they work. 

 

So, how much are wages actually going to rise?

 

Well, as noted above the percentage increase this December will be 10 per cent added to the hourly rate for each classification in the respective awards. 

 

For example, a Level 3.1 Certificate III educator on commencement will earn $29.89 per hour, an increase of $2.72 on the old rate of $27.17 from 2 December. 

 

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.

 

This methodology will apply to all classifications in each Award. 

 

And what about if an employee is already receiving an above award payment?

 

In circumstances where an educator already is paid above award they too will receive a pay increase but it will be calculated as 10 per cent of the Award rate and not 10 per cent of their current wage rate. 

 

For example, a Level 6.3 Director who is currently being paid above award at $45 an hour will receive an increase of $3.96 (10 per cent of the Award rate of $39.55) taking their new pay level to $48.96 an hour. 

 

What about on-costs? Are these also included in the increases?

 

Our understanding is that the payment providers receive will include a portion of dollars that can and will be used to set off against on costs incurred on the payment. 

 

The Government has not explicitly committed to this largely because of how the “worker retention” payments have been calculated however there is reference to costs in the Grant Guidelines that say “any funds provided by this grant must first be expanded on supplementing wages for eligible ECE workers.”

 

It then goes on to say, “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.”

 

So what happens next from an educator’s perspective?

 

Not too much. 

 

For a service that’s opting into the funding scheme there may be some engagement around workplace instruments but other than that it’s just a matter of standing by until the 2 December arrives and once that happens to check the payment amounts are correct. 

 

Additional information can be found at the Department of Education’s dedicated web pages on the worker retention payment that can be found here.

 

Note: This article has been updated since original publication. The comments about on-costs have been refined to more clearly reflect the current understanding of their inclusion.