Worker retention payment scheme also expanding to two new services
The Australian Government has committed $3.6 billion to make permanent a 15% pay rise for early childhood education and care workers, extending the worker retention payment to June 30, 2028.
The payment was introduced in 2024 to attract and retain qualified educators, with the 15% rise coming into force in December 2024.
United Workers Union national president Jo Schofield said the extension effectively fills the gap until gender undervaluation increases already won by educators take effect.
"Early educators were willing to walk off the job to defend this pay rise, and they deserve credit for this win," Schofield said.
"They were facing a huge impact from a looming pay cliff this year, and would have lost up to 15% of their pay just before Christmas."
Schofield said the sector had struggled with retention before the pay rise, with underpaid and exhausted educators leaving in large numbers.
Scheme expanded to new services
Meanwhile, the worker retention payment will now be available to Family Day Care (FDC) and In Home Care (IHC) services, provided they engage all their educators as employees rather than contractors.
Eligible services may seek payments backdated to July 2026, according to the Department of Education.
To qualify, FDC and IHC services must meet grant conditions including capping fee growth by a set percentage and engaging workers under an eligible workplace instrument.
Services already receiving the payment must not increase fees by more than 5.8% between August 8, 2026, and August 7, 2027. Services seeking to join the scheme must not increase fees by more than 5.8% between June 17, 2026, and August 7, 2027.
From July 2027, services rated as not "Meeting" Quality Area 2 of the National Quality Standard, which covers child health and safety, risk having their payments cut or suspended.
Wider wage increases for workers
The extension of the worker retention payment scheme comes as a separate round of wage increases flows through the broader economy.
The Fair Work Commission's 2026 Annual Wage Review lifted the minimum wage by six per cent to $26.44 per hour, above $1,000 a week for the first time, and increased modern award wages by 4.75%.
In the two weeks since the rises took effect on July 1, award-reliant workers have collectively received an estimated $242.9 million in additional wages, benefiting 2.7 million Australians.
Minister for Employment and Workplace Relations Amanda Rishworth said the government backed the increase to ease cost-of-living pressures on working Australians.
"Millions of Australian workers are now experiencing the tangible impact of minimum wage increases, with an additional quarter of a million dollars now in the pockets of hard working Australians," Rishworth said.
