Clarifying the Workforce Retention Payment: facts, benefits and key deadlines

The deadline to submit applications for backdated payments has been extended to 30 September 2025.

Applications only need to be submitted by this date not completed to qualify for backdating to 2 December 2024. The funding review backdating period now extends to 31 October 2025.  For new applications fast approaching, early childhood education and care (ECEC) providers are encouraged to apply for the Federal Government’s Workforce Retention Payment now to ensure they can access back pay dating back to 2 December 2024.

 

Conscious of the critical role the Workforce Retention Payment is playing in services across Australia, Community Early Learning Australia (CELA) and Community Child Care Association (CCC) have compiled practical guidance to support participation. This article draws on publicly available resources from the Department of Education, the Fair Work Ombudsman, and sector organisations to clarify common questions and help services navigate the application process.

  

The Workforce Retention Payment is a key component of the Government’s commitment to the ECEC workforce. The payment supports eligible educators and teachers by offering direct financial support that recognises their contribution and encourages long-term retention. It aims to address one of the sector’s most persistent challenges: high turnover and workforce instability.

 

Importantly, the payment complements existing retention and professional development strategies already in place at many services. It strengthens a service’s ability to offer secure employment pathways, attract and retain quality staff, and enhance high quality educational outcomes for children.

 

Applications are open to eligible providers, regardless of union membership or existing workplace agreements.

 

Clarifying common concerns

 

Union membership is not required:

The payment is part of a government-funded initiative and is open to all eligible services, regardless of whether staff are members of a union.

 

A workplace instrument is required:  

A workplace instrument merely sets the ground rules for wages, conditions and hours to eliminate any ambiguity.  As this is a grant, not a change to the award, the instrument guarantees that the funding flows straight to workers.

 

A EA is not mandatory: 

Providers can opt to use Multi-Employer Agreements (EA) or Individual Flexibility Arrangements (IFAs), depending on their needs. Both pathways are supported with publicly available guidance.

 

Understanding EAs and IFAs

 

For Approved Providers, understanding employment agreements is essential not only for workforce retention and compliance, but also for reducing uncertainty around participation in the Workforce Retention Payment.

 

The payment does not require services to enter into a particular industrial arrangement, nor does it compel union membership or restrict future operational choices. Instead, services can choose to use tools such as Enterprise Agreements (EAs) or Individual Flexibility Arrangements (IFAs) where appropriate, to pass on the funded wages.

 

A Multi-Employer Agreement (EA) is a legally binding agreement negotiated between an employer and a group of employees (or their representatives) that sets out terms and conditions of employment. EAs must be lodged with and approved by the Fair Work Commission, ensuring that all staff covered are better off overall compared to the relevant modern award.

 

For early learning services, an EA offers the advantage of clearly defined expectations, reduced ambiguity in wage structures, and a structured pathway for recognising career progression.

 

EAs are not permanent or inflexible. They are valid for a set period and can be reviewed, amended or renegotiated. 

 

Benefits of an EA include:

 

• Defined pay scales and entitlements
• Opportunities for tailored professional learning and career progression
• Clear dispute resolution procedures
• Support for long-term workforce planning and staff wellbeing

 

For more information on EAs visit Fair Work.

 

An Individual Flexibility Arrangement (IFA) is a written agreement between an employer and an individual employee that allows for certain conditions of a modern award or EA to be adjusted to suit specific needs. IFAs are designed to promote work–life balance and can be used where both parties agree that a variation would provide mutual benefit.

 

IFAs are designed to offer flexibility while ensuring positive outcomes for both the employee and employer. They should result in conditions that provide an overall benefit to the employee when compared to the relevant award. To support transparency and good practice, IFAs should be documented, signed by both parties, and reviewed periodically to ensure they continue to meet the needs of both the individual and the service.

 

Common uses for IFAs include:

 

• Adjusting hours of work to support study or caregiving
• Offering additional benefits or flexibility around leave
• Tailoring rostering arrangements to suit educator preferences
• Supporting phased return-to-work plans after extended leave (e.g. parental or medical)
• Enabling flexible work arrangements across multiple service sites

 

For more information on IFAs visit Fair Work.

 

Request ECEC pay rise workplace instrument options pack here.

 

Benefits for services, families, educators and children

 

A well-supported early childhood workforce has a direct and lasting impact across all aspects of a service community.

 

The Workforce Retention Payment delivers strategic and operational value that extends beyond individual staff members. It helps shape a more resilient, consistent and confident sector as recognised in Australia’s early childhood policy and legislative frameworks.

 

These benefits align with key objectives under the National Quality Framework (NQF), which promotes high-quality care through qualified, supported and stable workforces.

 

Under the Education and Care Services National Law and Regulations particularly Regulation 168 Approved Providers are required to implement effective staffing, governance and risk management practices.

 

By retaining skilled educators, initiatives like the Workforce Retention Payment strengthen compliance in these areas. They also support continuous improvement against the National Quality Standard (NQS), especially in Quality Area 4: Staffing arrangements and Quality Area 7: Governance and leadership.

 

The Australian Children’s Education and Care Quality Authority (ACECQA) further reinforces the connection between educator wellbeing, workforce sustainability and the delivery of high-quality care, as outlined in the NQS. 

 

Additionally, services are encouraged to incorporate retention strategies into their Quality Improvement Plans (QIPs) to demonstrate alignment with Quality Areas 4 and 7 and to support a culture of continuous improvement.

 

Participation in the Workforce Retention Payment scheme offers benefits across all layers of the ECEC ecosystem:

 

• For educators: Provides meaningful financial recognition that affirms their professional value, reduces financial stress, and improves overall job satisfaction. Greater stability in roles can lead to deeper engagement, increased motivation, improved participation in professional development, and stronger focus on health, safety and wellbeing.
• For children: Encourages ongoing relationships with familiar educators, which support attachment, emotional security and learning progression. Stable environments contribute to more predictable routines, responsive pedagogy, and stronger attention to each child’s safety, health and wellbeing.
• For services: Assist in reduced turnover and the administrative and financial burden of constant recruitment. With stronger staffing continuity, services can improve internal communication, enhance programming consistency, embed long-term planning strategies, and better support workplace health and wellbeing initiatives.
• For families: Builds trust and continuity through a consistent educator presence. Families benefit from fewer disruptions, stronger communication pathways, and the reassurance that their child’s care and education is supported by a cohesive, long-standing team.
• For providers: Reinforces regulatory compliance, especially under National Regulation 168, which mandates effective staffing arrangements and governance practices. Participation supports operational resilience, enhances reputation, and reduces the risk of quality or compliance breaches.

 

Real-world reflections: provider and educator experiences

 

Early learning services that have accessed the Workforce Retention Payment are reporting meaningful outcomes for their teams and broader communities. From reduced turnover and improved team morale to positive feedback from families and stronger child outcomes, the benefits are tangible.

 

“My team are happily receiving their 10% raise and some have commented on the difference it is making to their lives. The next rise will allow people to potentially save and future plan, financially, for their families and lives. So again, well done, you have positively made a difference to thousands of families, day to day lives, Ms Caren Aspinall, Operational Coordinator, Coburg Children’s Care, said.

 

FAQs: key questions answered

 

The Workforce Retention Payment has prompted a range of questions. The responses below are designed to clarify common points of confusion to support informed decisions about participation.

 

Q: Who can apply for the Workforce Retention Payment? 

A: Approved ECEC providers who meet the eligibility criteria outlined by the Department of Education.

 

Q: Do services or staff need to be union members? 

A: No. There is no requirement for union membership. Participation is open to all eligible applicants.

 

Q: Is an EA or an IFA required? 

A: You must have an eligible workplace instrument to receive the funding.  Approved Providers may choose to explore either option to support tailored workforce arrangements or align with long-term staffing strategies.

 

Q: What support is available? 

A: Guidance, templates and resources are available from the Department of Education, Community Early Learning Australia (CELA) and Community Childcare Association (CCC). 

 

Q: Will this impact family fees? 

A: The payment supports educator retention and does not impose additional costs on families.  The Department has stated that the funding will contribute towards associated on-costs of a wage increase, as long as the funding received is first expended on wages.

 

The eligible on-costs can include:

 

• superannuation contributions
• employee entitlements
• leave loadings
• workers’ compensation insurance
• payroll tax.

 

Q: What is the Government’s long-term commitment to the Workforce Retention Payment?

 

A: The current funding has been positioned as an interim measure while the Government awaits the outcome of the Fair Work Commission’s gender undervaluation proceedings and considers its response to the ACCC and Productivity Commission reports. The introduction of the Wage Justice for Early Childhood Education and Care Workers (Special Account) Bill 2024 signals a broader legislative intent to provide longer-term funding stability and support sector sustainability.

 

Q: Is the agreement still binding when the grant ends?

 

A: Yes. If you enter into an Enterprise Agreement (EA), it remains in effect for its agreed term, regardless of whether the Workforce Retention Payment continues. Providers should consider this when developing long-term staffing strategies.

 

Q: Will the funding cover services who operate well above minimum staffing ratios?

 

The Worker Retention Grant recognises that a number of services have higher staffing costs. Eligible providers can apply for a top-up payment to ensure adequate support to implement wage increases.

 

Q: How does the fee cap work?

 

A: Services receiving the payment must not increase fees beyond 4.4 per cent annually. This cap ensures that the wage uplift is not passed on to families. Exceptions may apply where services demonstrate that exceeding the cap is necessary to maintain financial viability.

 

Q: What happens if I need to increase my fees above 4.4% to maintain viability?

 

A: Services can apply for an exemption. The Department will assess applications on a case-by-case basis and consider evidence related to operational costs, service sustainability, and enrolment impacts.

 

Q: What the department is doing to speed up the application approval process.

 

A: The Department of Education has established dedicated assessment teams and is prioritising application processing times across extended hours. Services are encouraged to apply early and ensure documentation is complete to avoid delays.

 

Q: How to overcome the information and misinformation, so as services can make the right decision for their staff and service.

 

A: For accurate information, services can contact the CELA and CCC hotline on 1300 346 818 to discuss options and gain a greater understanding of the grant as well as access to a wide range of resources to support understanding and decision making. Speaking with advisors directly can help clarify eligibility and dispel confusion.

 

Q: How to take advantage of back pay to December 2024.

 

A: Applications submitted by 30 September can access retrospective funding from 2 December 2024. This means eligible educators can receive back pay, even if the application is approved after the 30th September 2025.

 

For eligible services to access free guidance on accessing the 15% pay increase call the Workplace Relations Team on 1300 346 818, email [email protected] or visit https://www.cela.org.au/how-we-help/15-pay-rise-early-childhood

 

For additional FAQs support visit here.

 

Please note: The information contained in this article  is general information only and is not a substitute for legal advice. The Sector does not accept liability for any action taken based on information provided or for any loss as a result of reliance on this information.