Worker retention payment guidance explains funding calculations, caps and top-ups

Updated departmental guidance outlines how payments are calculated and what providers need to demonstrate when seeking additional funding.

Early childhood education and care providers can review updated Australian Government guidance on worker retention payment calculations, seasonal adjustments, funding caps and the process for seeking top-up payments.

The Department of Education’s Payments and how they work page, updated on 8 October 2026, brings these arrangements together for participating providers.

For service leaders and finance teams, the guidance provides a basis for checking payment expectations against service activity, payroll costs and grant conditions.

The worker retention payment supports higher wages for eligible ECEC workers and the associated costs of employing them.

The department describes funding equivalent to 15 per cent of the Applicable Award rate, with additional funding of at least 20 per cent for eligible on-costs.

Providers must apply grant funding to the full required wage increase before using it for eligible on-costs. Where standard funding does not adequately cover these costs, providers may seek a funding review.

Payroll obligations should also be checked against the department’s minimum rates guidance, which distinguishes the minimum hourly rate from the grant contribution that must be passed on to workers.

Standard payments are calculated using labour costs associated with the charged hours of care reported through the Child Care Subsidy System each month.

The calculation considers the number of children receiving care and service characteristics, using assumptions about staffing and rostering.

Payment amounts can therefore vary as service activity changes. Providers operating multiple services are expected to manage and smooth funding across their services over the year and maintain appropriate records.

Centre-based day care services receive seasonal adjustments intended to balance funding across quieter and busier periods.

The department applies advances of:

• 10 per cent in December
• 15 per cent in January
• five per cent in February.

The same dollar amounts are recovered during September, October and November.

Providers should account for these adjustments when reviewing cashflow and deciding how to distribute any additional funding to workers.

Each grant agreement sets a maximum funding cap based on Child Care Subsidy System data, with a buffer for changes.

The department cautions that providers may receive less than this maximum. Averaging the cap across the grant period will not reliably predict individual payments because amounts depend on care hours, seasonal adjustments and the wage increase applying at the time.

When a provider approaches its cap, the department will check payments and may increase the cap if required. It says providers do not need to initiate this check and will be contacted if necessary.

Standard payments are made every four weeks in arrears. Approved top-up payments are paid quarterly in arrears.

Providers can generally expect their first payment approximately three to seven weeks after their grant agreement begins. This may include backpay from the agreement’s start date.

Payments are made at service level through the Child Care Subsidy System, into the account used for CCS payments. Providers should keep their bank details current and distinguish the published processing date from the date funds arrive.

Before requesting a funding review, providers must demonstrate that they have managed funding across their services and accounted for seasonal fluctuations.

The department identifies several circumstances commonly associated with reviews, including staffing above minimum ratios, stand-alone jurisdiction-funded preschool rooms, First Nations and remote services, and distinctive operating models.

These circumstances do not automatically establish eligibility for a top-up.

Applications require evidence that the standard calculation does not sufficiently cover the wage increase and minimum contribution towards eligible on-costs. This includes paid staff hours and applicable award classifications, supported by payroll or financial records.

Providers can contact the Child Care Subsidy Provider Helpdesk at [email protected] to begin the process. A person with management or control must complete the application.

An approved review may result in a grant variation, quarterly top-up payments and additional reporting requirements. Providers should consult the full departmental guidance when assessing their circumstances.