Worker Retention Payment extended to 2028: what early childhood providers need to know

The Australian Government has announced a $3.6 billion extension of the Worker Retention Payment (WRP), securing wage support for eligible early childhood education and care (ECEC) workers through to 30 June 2028 while continuing to limit fee increases for families.

The extension represents one of the largest workforce investments ever made in Australia's early learning sector and is designed to support educator attraction and retention, strengthen quality and child safety outcomes, and maintain affordability for families through ongoing fee growth caps.

The Government has framed the extension as both a workforce and affordability measure, designed to lock in the 15 per cent pay rise for early educators, support recruitment and retention, and prevent wage costs from being passed directly on to parents and carers.

The announcement also expands eligibility to parts of the Family Day Care (FDC) and In Home Care (IHC) sectors, introduces new quality-linked funding conditions, and confirms how the payment will interact with the Fair Work Commission's recent Annual Wage Review decision.

Long-Term workforce certainty

Introduced in 2024, the Worker Retention Payment was designed to address persistent workforce shortages by supporting wage increases for educators and teachers.

The extension provides much-needed certainty for providers, educators and families, ensuring wage support remains in place until June 2028 while the sector continues to navigate workforce challenges and growing demand for early learning services.

The Government says the policy is already delivering measurable workforce outcomes. According to the Prime Minister's announcement, the sector has gained approximately 20,000 additional workers since the payment was introduced, representing an increase of around 8 per cent in the workforce. Early childhood educator vacancies have fallen by almost 31 per cent, while the proportion of services operating with staffing waivers has dropped from 8.9 per cent to 5.1 per cent.

The Government also highlighted the financial impact for educators, stating that when combined with wage increases, a typical full-time educator is now earning approximately $255 more per week than they were in December 2024. For early childhood teachers, the increase is around $410 per week.

The announcement follows sustained advocacy from providers, unions and sector stakeholders who have argued that improving educator wages is critical to retaining experienced professionals and attracting new entrants to the workforce.

Family Day Care and In Home Care become eligible

One of the most significant changes under the extension is the inclusion of Family Day Care and In Home Care services that employ all educators as employees.

To access the Worker Retention Payment, eligible FDC and IHC services will need to:

• Engage workers under an eligible workplace instrument.
• Comply with fee growth cap requirements.
• Meet all applicable grant conditions.

Eligible services will also be able to apply for payments backdated to July 2026.

The Department of Education has advised that further details regarding eligibility requirements and application processes will be released in coming weeks.

Fee Growth Cap Remains in Place

To continue receiving Worker Retention Payment funding, services must comply with fee growth restrictions.

For services already participating in the program, fees must not increase by more than 5.8 per cent between 8 August 2026 and 7 August 2027.

Services joining the program, including eligible Family Day Care and In Home Care providers, must not increase fees by more than 5.8 per cent between 17 June 2026 and 7 August 2027.

The Government says the cap is designed to balance workforce investment with affordability for families, ensuring that educator wage increases do not result in significant fee increases for parents and carers.

The announcement also complements the Government's broader early learning reforms, including the upcoming Three Day Guarantee, which is intended to improve access to subsidised early childhood education and care.

Child safety and quality now linked to funding

Perhaps the most significant policy shift within the extension is the introduction of a direct connection between workforce funding and quality outcomes.

From July 2027, services that are not rated as Meeting National Quality Standard in Quality Area 2 – Children's Health and Safety, may face reductions or suspension of Worker Retention Payment funding.

Quality Area 2 focuses on key child safety requirements, including:

• Children's health and wellbeing
• Supervision arrangements
• Sleep and rest practices
• Incident and emergency management
• Risk assessment and minimisation
• Protection from harm and hazards

The move reflects an increasing government focus on child safety and quality assurance and signals that workforce investment and service quality will become more closely connected over time.

The Government has described the new requirement as an important safeguard to ensure public funding supports services that are delivering safe and high-quality environments for children.

Services may need to review workplace arrangements

To remain eligible under the extended program, providers must continue engaging employees under workplace instruments that satisfy grant conditions.

The Government has acknowledged that some providers may need time to review and update workplace arrangements and has indicated further guidance will be released shortly.

For many services, the extension may trigger a review of employment arrangements, workplace agreements and payroll systems to ensure ongoing compliance.

Annual wage review adds further increases

The extension announcement comes shortly after the Fair Work Commission's Annual Wage Review decision, which awarded a 4.75 per cent increase to minimum award wages from 1 July 2026.

Although final wage tables are yet to be released, the increase will affect how Worker Retention Payment funding is calculated and passed through to educators.

For employees currently receiving minimum award rates, wages will increase in line with the full 4.75 per cent adjustment.

Employees already earning above award rates may also receive increases depending on their current rate of pay and how it compares with the new award minimums.

What it means for teachers

For employees covered by the Educational Services (Teachers) Award 2020, both award wages and Worker Retention Payment amounts will increase in line with the Fair Work Commission's decision.

The Department of Education has confirmed that eligible teachers will continue to receive wages that are at least 15 per cent above the applicable award rate.

Combined with the Worker Retention Payment, the Government says the changes will continue to improve the competitiveness of teacher salaries in early childhood settings and support retention within the profession.

What it means for educators

For educators covered by the Children's Services Award 2010, minimum hourly rates will also increase.

The Department has advised that Worker Retention Payment calculations will continue to maintain remuneration at least 15 per cent above the benchmark award rate while also incorporating outcomes arising from the Fair Work Commission's Gender-Based Undervaluation Priority Awards Review.

This means the Worker Retention Payment will absorb increases associated with the gender undervaluation process while maintaining the intended wage uplift for eligible workers.

Additional adjustments are expected following the next gender-based undervaluation increase scheduled for 30 June 2026.

The Department has also confirmed that the minimum Worker Retention Payment amounts required to be passed on to eligible workers will increase following the Annual Wage Review decision.

What providers should do next

While further implementation details are still to be released, providers should begin considering several key actions:

• Review current workplace instruments and employment arrangements.
• Assess fee strategies against the new 5.8 per cent cap.
• Monitor updates relating to Family Day Care and In Home Care eligibility.
• Review Quality Area 2 performance and child safety systems ahead of the July 2027 requirements.
• Prepare for updated wage rates and Worker Retention Payment calculations following the Fair Work Commission's Annual Wage Review.

The Department of Education has advised that updated grant guidelines, eligibility information and minimum payment rates will be released over the coming weeks.

Providers seeking to stay informed are encouraged to monitor updates through the Department of Education website, subscribe to departmental workforce and provider communications, and follow official channels as further implementation details become available.

For many providers, the extension delivers welcome certainty. However, it also signals the next phase of reform, one that increasingly links workforce investment, affordability, quality and child safety as the sector moves towards a more sustainable, professionalised and accountable early childhood education and care system.

For many providers, the extension delivers welcome certainty. However, it also signals the next phase of reform, one that increasingly links workforce investment, affordability, quality and child safety as the sector moves towards a more sustainable, professionalised and accountable early childhood education and care system.