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Guide to 2026 ECEC sector changes: award wages and worker retention payments

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Fiona Alston

Feb 27, 2026

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Significant changes to award wages and classification structures will take effect across the early childhood education and care (ECEC) sector from 1 March 2026. The reforms follow a landmark Fair Work Commission decision addressing gender-based undervaluation and will directly affect services operating under the Children’s Services Award 2010.

Approved providers, centre managers and payroll teams must now prepare for revised classifications, phased wage increases and updated worker retention payment settings.

The reforms stem from a major review conducted by the Fair Work Commission (FWC) into the gender undervaluation priority awards review.

Following the Annual Wage Review 2023–24 decision, the FWC identified five priority awards for examination. The objective was clear – determine whether work performed in female-dominated industries had been historically undervalued and, if so, correct it.

One of those priority instruments was the Children’s Services Award 2010, the key award covering many educators and support staff working in long day care and outside school hours care services.

The review process extended throughout 2024 and 2025, including multiple hearings and sector consultations. On 10 December 2025, the Expert Panel for pay equity in the care and community sector handed down its final decision in relation to the Children’s Services Award 2010, confirming structural and wage changes to address identified undervaluation.

Importantly, the determination applies only to the Children’s Services Award 2010. It does not apply to employees covered under the Educational Services (Teachers) Award 2020. Providers must ensure workforce mapping is accurate to avoid compliance errors.

Two major reforms commence from 1 March 2026 for employees covered by the Children’s Services Award 2010.

1. A simplified classification structure

A new, streamlined classification framework will replace the current structure. The intention is to improve clarity around role expectations, career progression and pay levels.

Services will need to:

review position descriptions
reassess staff classifications
ensure employment contracts align with the new structure
update payroll coding

Failure to correctly reclassify staff may expose providers to underpayment risk.

2. Phased wage increases

The FWC decision introduces staged wage increases designed to correct gender-based undervaluation. These increases will be implemented progressively, beginning 1 March 2026.

The adjustments represent a structural correction rather than a standard annual wage review outcome. Services should treat the increases as part of a longer-term reform schedule rather than a one-off adjustment.

The changes must be managed alongside the Commonwealth Government’s worker retention payment settings.

Worker retention payments were designed to support wage increases in the ECEC sector and reflect the outcomes of the FWC’s undervaluation review. Minimum payment rates have now been updated to align with the new Children’s Services Award 2010 rates from 1 March 2026. Approved providers can review the updated worker retention payment minimum rates on the Department of Education website.

The key compliance principle is this: as base award wages increase, the dollar value of the required retention payment top-up reduces proportionally.

Because the worker retention payment is structured as a percentage-based top-up above award rates, providers must ensure:

educators continue to receive the required percentage above the new award rate
payroll systems dynamically adjust from 1 March 2026
no employee falls below the combined minimum threshold

For example, if the award rate increases by 5 per cent and the retention payment requires wages to sit 10 per cent above award, the 10 per cent obligation continues, calculated against the higher base rate.

The offset operates because scheduled award increases through to 30 November 2026 remain lower than the total retention payment value.

Payroll errors during transition may result in funding breaches or Fair Work compliance action.

Funding compliance requirements remain unchanged.

All worker retention payment funds must be directed strictly towards:

wages
eligible on-costs directly linked to wages

The funding cannot be applied to general operating costs, administration expenses or profit. Misallocation may trigger recovery action.

Providers must maintain clear financial records demonstrating that retention payments have been applied appropriately.

Although these changes arise under workplace law, they intersect with broader governance obligations under the National Quality Framework.

Approved providers must continue to ensure:

sound financial management systems
accurate staff records
compliance with employment instruments
responsible governance practices

Strong governance directly supports compliance under the Education and Care Services National Law and Regulations, particularly in relation to operational management and provider fitness and propriety.

With implementation approaching, services should act now.

Recommended actions include:

conducting a workforce classification audit
reviewing updated award pay tables
confirming payroll software capability
briefing finance and HR teams
reviewing employment contracts and letters of variation
monitoring official guidance from the Fair Work Commission

Early preparation will reduce financial risk, payroll disruption and compliance exposure.

The 2026 reforms represent one of the most significant wage and structural adjustments to the ECEC workforce in recent years.

For approved providers and centre managers, the priority is clear: ensure accurate classification, correct wage calculations and strict adherence to worker retention funding conditions.

The changes are designed to address historic undervaluation and strengthen workforce sustainability. However, compliance responsibility remains firmly with each provider.

Careful planning, accurate payroll implementation and strong governance oversight will be essential as the sector transitions to the new framework.

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