Workforce discount allows providers to reduce childcare costs for eligible employees without affecting CCS

Approved early childhood education and care providers can offer discounted care to eligible employees without reducing their family’s Child Care Subsidy entitlement.

Known as the workforce discount, the optional incentive is intended to help providers attract and retain qualified staff by reducing the out-of-pocket childcare costs of eligible employees.

Unlike an ordinary fee discount, the workforce discount is a prescribed discount under the Child Care Subsidy framework. This means it is applied after CCS has been calculated and does not reduce the family’s CCS entitlement, provided the relevant requirements are followed. 

Providers may offer the workforce discount to:

• early childhood teachers and educators
• centre directors and coordinators who hold an early childhood education and care qualification
• cooks.

To be eligible, the employee must work at a Centre Based Day Care or Outside School Hours Care service.

Their child must also be enrolled at either:

• the service where the employee works, or
• another service operated by the same approved provider. 

The discount is voluntary, meaning each provider can decide whether to offer it and determine the amount of the discount.

The discount applies to the employee’s gap fee after their CCS entitlement has been calculated.

The gap fee is the difference between the service’s fee and the amount covered by CCS.

Under the workforce discount arrangements:

• the provider reports the full session fee
• CCS is calculated against that full fee
• the workforce discount is then applied to the remaining gap fee
• the employee must pay at least five per cent of the gap fee.

This means a provider may discount up to 95 per cent of the employee’s gap fee, but cannot waive it entirely. 

For example, where an employee has a gap fee of $60, the maximum workforce discount would be $57, leaving the employee to pay $3.

For employees with young children, the cost of care can influence decisions about returning to work, increasing working hours or remaining in the sector.

Offering discounted care may help providers:

• reduce the financial pressure experienced by eligible employees
• strengthen their employee benefits package
• support workforce participation
• improve recruitment and retention efforts.

The arrangement may be particularly valuable for providers operating several services, as an eligible employee’s child does not necessarily need to attend the same location where their parent works.

While the workforce discount may form part of a broader workforce strategy, providers should consider the financial implications and establish clear eligibility and administration processes before introducing it.

Providers must include details of the workforce discount when submitting or updating session reports.

This includes:

• the full session fee before the discount is applied
• the type of prescribed discount
• an estimate of the discount amount.

The discount must also appear on the family’s statement of entitlement. Providers should not reduce the reported session fee before CCS is calculated, as doing so may affect the family’s subsidy entitlement. 

Providers must maintain records of discounts and show how each contribution was applied to the family’s account. They may also need to confirm with their childcare management software provider how prescribed discounts are recorded and reported through their system. 

Before implementing the workforce discount, providers should ensure their employment, fee and enrolment policies clearly explain:

• which roles are eligible
• whether the child may attend another service operated by the provider
• how the discount amount will be determined
• how changes to employment or enrolment circumstances will be managed
• the employee’s obligation to pay at least five per cent of the gap fee
• how the discount will appear on statements and accounts.

Clear and consistently applied processes can help providers use the incentive fairly while meeting their CCS reporting and record-keeping obligations.

Providers can access detailed guidance, examples and reporting requirements through the Australian Government Department of Education’s information on discounted care for the early childhood workforce and managing prescribed discounts.

For providers continuing to navigate workforce shortages, the discount offers a practical way to support eligible employees while preserving their CCS entitlement.