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How to set up the ECEC worker retention payment in the payroll platform

Updated

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The Australian Government funds a worker retention payment to support a 15% wage increase for eligible early childhood education and care (ECEC) workers. This article explains how to set it up in the payroll platform.

Who is eligible?

The payment applies to employees who:

  • are covered by the Children’s Services Award [MA000120] and work in long day care or outside school hours care settings
  • are covered by the Educational Services (Teachers) Award [MA000077] and work in CCS-approved long day care or outside school hours care settings
  • perform duties covered by either award but are paid under a different instrument, such as a state-based award

Trainees not paid under either award are not eligible.

How the payment works

Employers must give eligible workers a 15% wage increase over two years: 10% above award rates in year one, and a further 5% in year two. Every eligible worker is entitled to the minimum rates, including those already paid above award. See the worker retention payment minimum rates for details.

In the payroll platform, the retention payment is set up as an all-purpose allowance paid per hour worked. It appears as a separate earnings line in pay runs, payslips, and reports — so you can pay the retention amount without changing the employee’s existing hourly rate, and penalties such as shift loadings, overtime, and casual loading calculate correctly on top of it.

Set up the retention payment

Complete the following five steps in order. Each step builds on the one before it.

Step 1: Create three new pay categories

The three pay categories below are referenced in the award rules (Step 3) and pay rate templates (Step 4). Create them first so they are available when you need them.

For help, see Create and manage pay categories on payroll classic. Set each one as a fixed pay category with rate precision set to 2 decimal places. Use the super rate and payment classification in the table below so super and STP reporting are correct.

The table below lists the three new pay categories for the ECEC worker retention payment, with each super rate and payment classification.

Pay category name Super rate Payment classification
ECEC Retention Wage 12% Default
ECEC Retention Wage - Overtime 0% Overtime
ECEC Retention Wage - Paid Leave 12% Leave - other paid leave
Step 2: Create a tag and assign it to eligible employees

Create a tag for the ECEC retention payment and assign it to every eligible employee. In Step 3, the custom award rules are configured to apply only to employees who have this tag — so the retention payment is only calculated for the right people.

  1. Create a new tag for the ECEC retention payment.
  2. Assign the tag to every eligible employee.

For help, see Manage your organisation’s tags on payroll classic.

Step 3: Add custom rules to the award rule set
  1. Unlock the award rules so you can edit them. For help, see Manage my organisation’s awards on payroll classic.
  2. Add the four custom rules shown below. You can place them at the bottom of the rule set.

Each rule uses the ECEC tag from Step 2 as a condition so only tagged employees are affected. The table below summarises the rule structure; the screenshots that follow show exactly how to configure each one in the platform.

The table below lists the custom rules to add to the award rule set for the ECEC worker retention payment, including when each applies and its WHEN and THEN conditions.

Rule Applies to WHEN THEN
OTE & OT Permanent & Casual Time worked (ordinary and overtime hours) Add ECEC Retention Wage (ordinary) + ECEC Retention Wage – Overtime (overtime)
Paid leave Permanent & Casual Work type is paid leave > 0 hrs Add ECEC Retention Wage – Paid Leave

Important

The Paid Leave, OTE and OT rules must not include an allowance rate multiplier. This makes the leave and overtime base rate reflect the new minimum rates directly.

Permanent employees: OTE and OT

Screenshot of ECEC Retention Wage OTE and OT Fixed custom award rule for permanent employees showing WHEN Time worked with Work type conditions, THEN Add all-purpose allowance of ECEC Retention Wage per hour worked for ordinary hours and ECEC Retention Wage - Overtime per hour worked for overtime hours, both highlighted in red boxes

Permanent employees: Paid leave

Screenshot of ECEC Retention Wage Paid Leave Fixed custom award rule showing WHEN Time worked where Work type is one of paid leave types is greater than 0 hrs, THEN Add all-purpose allowance of ECEC Retention Wage - Paid Leave per hour worked highlighted in a red box

Casual employees: OTE and OT

Screenshot of ECEC Retention Wage OTE and OT Fixed custom award rule for casual employees showing WHEN Time worked with Work type conditions, THEN Add all-purpose allowance of ECEC Retention Wage per hour worked and ECEC Retention Wage - Overtime per hour worked, both highlighted in red boxes

Casual employees: Paid leave

Screenshot of ECEC Retention Wage Paid Leave Fixed custom award rule for casual employees showing WHEN Time worked where Work type is one of paid leave types is greater than 0 hrs, THEN Add all-purpose allowance of ECEC Retention Wage - Paid Leave per hour worked highlighted in a red box
Step 4: Update pay rate templates with the retention rates

Go to the Education Worker Retention Table and find the Difference between new minimum rate and award column. This is the amount you enter for each ECEC pay category.

Screenshot of Minimum rates by award page showing Children's Services Award 2010 section expanded for March 2026 to June 2026 period, with Support Worker levels 1.1 through 3.1 showing Award rates, Additional minimum amounts payable to staff, and Difference between minimum rate and award column highlighted in red box

Enter the same rate against all three ECEC pay categories in both the Permanent and Casual templates. Choose a method:

Helpful hint

Don’t add casual loading to the rate yourself. The 25% casual loading is calculated automatically because the rule set treats the payment as an all-purpose allowance.

Method A: Update each template manually

  1. Open each ECEC pay rate template.
  2. Enter the difference amount against all three ECEC retention pay categories.
  3. Use the same rate in both the Permanent and Casual templates.
    Screenshot of pay run employee allowances showing ECEC Retention Wage at $3.74000 per unit, ECEC Retention Wage - Overtime at $3.74000 per unit, and ECEC Retention Wage - Paid Leave at $3.74 per unit, with the rate values highlighted in a red box

Method B: Update all templates in bulk

Use the export/import feature to update many templates at once. For help, see Importing and exporting pay rate templates.

  1. Select the relevant award from the Your pay rate templates drop-down menu and download the spreadsheet.

    Screenshot of Export Pay Rate Templates dialog showing a search field filtered to 'chil' with Children's Services Award 2010 highlighted, Excel spreadsheet format selected, and Download button

  2. Fill in the rate for the three retention pay categories only. Leave the SuperRate column blank unless the super percentage differs from the default.

    Screenshot of pay rate template spreadsheet showing ECEC Retention Wage, Overtime, and Paid Leave columns with $3.74 values for Children's Services casual and permanent worker classifications

  3. Re-import the completed spreadsheet.
Step 5: Adjust rates for employees paid above award

Employees paid above award are still entitled to the retention payment for their award classification. The payment is added on top of their current rate. For these employees, update the retention pay category rates on the employee’s own profile — not in the template — so the individual rate overrides the template value.

Example

  • An employee is classified at level 3.1 on the Children’s Services Award.
  • The award rate is $27.17, and they are currently paid $30.00 per hour (including an above-award payment).
  • The retention payment for level 3.1 is $2.72, so their new total rate is $32.72.

Update above-award employee rates in bulk (optional)

To update many employees at once, see Bulk update multiple pay rates for employees.

  1. Select Template with employee pay rates: active employees only.
  2. Override the prefilled rates with the correct amounts for above-award employees.
    Screenshot of pay run export spreadsheet showing 4 employees with ECEC Retention Wage, Overtime, and Paid Leave columns populated with $3.74 values

Helpful hint

If you used Method B in Step 4, the template rates will already appear on each employee’s profile. Only override the rate where the employee’s retention amount differs from the template.

Ongoing maintenance

Each time the minimum rates increase, update the retention pay category rates in your pay rate templates (Step 4) and update the rates for any above-award employees (Step 5).

Further information

If you set this up before 1 March 2026

Because of the Gender Undervaluation Wage Increase, part of the retention payment is now absorbed into employees’ award rates. You need to make two changes:

  • Update your Paid Leave, OTE and OT rules to remove the allowance rate multiplier (see Step 3).
  • Update your pay rate templates with the new difference amounts (see Step 4).

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