Worker retention payment: a guide for providers

Last reviewed: 9 November 2026. Checked against the Department of Education worker retention payment and eligibility and conditions pages on 9 November 2026, after the 17 June 2026 extension. The grant guidelines on GrantConnect are the binding terms; check them before setting fees.

Quick answer

The worker retention payment is a Commonwealth grant, paid through the Child Care Subsidy System, that funds a wage increase of 15% above award for eligible early childhood workers, plus at least 20% extra for on-costs. Since the 17 June 2026 extension it runs to 30 June 2028 and is open to centre-based day care, OSHC, and family day care and in home care services that employ all their educators. To get it a provider must engage workers under a compliant workplace instrument, pass all funding on as wages, keep fee increases within the fee growth cap, and from July 2027 meet Quality Area 2 of the NQS.

Who can apply, which workers must get the increase, the fee growth caps, the 2026 to 2028 extension dates and the new Quality Area 2 safety condition.

Which services and workers are covered

The conditions

ConditionWhat it means
Workplace instrumentWorkers must be engaged under an instrument (such as an enterprise agreement) that obliges the provider to pay at least 15% above the applicable award rates. Continuing participants extending beyond 30 November 2026 need their instrument approved by the department by 28 February 2027
Pass on the fundingAll funding goes to eligible workers as higher wages; reporting must show it
Fee growth capHourly fee increases must stay within the cap for each period, assessed from when families are first charged the higher fee, not when it is announced. Extras not included in reported fees are outside the cap
Safety (from July 2027)Centre-based day care, OSHC and family day care services not meeting Quality Area 2 may have funding cut or suspended; services rated below Meeting for QA2 should address findings and seek reassessment by 31 March 2027

Fee growth caps

For services that joined before 1 December 2025, the department lists caps of 4.4% (8 August 2024 to 7 August 2025), 4.2% (8 August 2025 to 7 August 2026) and 5.8% (8 August 2026 to 7 August 2027). Services joining from 17 June 2026, including family day care and in home care, face a 5.8% cap from 17 June 2026 to 7 August 2027, and a service that announced a larger increase may need to reduce it. Later caps will be based on the ABS Childcare Services Cost Index. A new service sets its own starting fee, which becomes its baseline; a new owner inherits the service’s existing baseline (eligibility and conditions). Check the current grant guidelines before any fee change, and give families the notice your payment of fees policy and regulation 172 require.

Key dates

DateMilestone
2 December 2024Program starts (10% increase)
1 December 2025Year 2 (15% increase)
17 June 2026Program extended to 30 June 2028 and opened to family day care and in home care
1 December 2026Year 3 starts; extension offers due back mid-December 2026
28 February 2027Updated workplace instrument approval due for continuing participants
31 March 2027Reassessment due for services not meeting QA2
1 July 2027QA2 safety condition starts
30 April 2028Applications close
30 June 2028Program ends

Source: Department of Education.

Getting ready for the QA2 condition

Quality Area 2 covers children’s health and safety: wellbeing and comfort, health practices, incident and emergency management, supervision and child protection. If your last rating for QA2 was Working Towards or Significant Improvement Required, the funding now depends on fixing it. See Quality Area 2, the supervision plan, child protection requirements and the assessment and rating checklist.

Frequently asked questions

Who is eligible for the worker retention payment?

CCS-approved centre-based day care and OSHC services, and family day care and in home care services that employ all their educators. Funding must go to all workers covered by the Children's Services Award or the Educational Services (Teachers) Award, or doing that work, but not head office or administration staff.

Has the worker retention payment been extended?

Yes. On 17 June 2026 the government extended it to 30 June 2028 and opened it to family day care and in home care services that employ their educators. Year 3 starts on 1 December 2026.

How much is the worker retention payment?

It funds wages at least 15% above the applicable award rates for eligible workers, plus at least an additional 20% of base funding for on-costs.

What is the childcare fee growth cap?

Services that joined before 1 December 2025 have caps of 4.4%, 4.2% and then 5.8% for 8 August 2026 to 7 August 2027. Services joining from 17 June 2026 have a 5.8% cap to 7 August 2027. Future caps will follow the ABS Childcare Services Cost Index; check the grant guidelines.

What is the QA2 condition?

From July 2027, services not meeting Quality Area 2 of the National Quality Standard may have their funding cut or suspended. Services rated below Meeting for QA2 should seek reassessment by 31 March 2027.

Ask the question in your own words

WIDEN Law answers National Quality Framework questions with inline citations to the National Law, the Regulations and the NQS, so you can check the source provision yourself.

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This page is a research summary, not legal or compliance advice. It is written in our own words from the sources linked on the page; confirm the position with your regulatory authority before relying on it for a compliance decision.