Three wage changes. One calendar year. If you manage a childcare centre and haven't mapped the full impact of the 2026 wage changes on your payroll, now is the time to do it.

For workers covered by the Children's Services Award 2010, the changes include two staged increases tied to the Fair Work Commission's gender-based undervaluation determination (effective March and June 2026), plus the standard Annual Wage Review increase from 1 July 2026. Each change came with its own compliance obligations. Together, they represent the most significant shift in childcare wage obligations in years.

Here is what happened, how the Worker Retention Payment interacts, and what operators need to act on now.

Why 2026 is different

Most years, childcare wage obligations shift once. The Fair Work Commission hands down its Annual Wage Review decision in June, the new rates apply from the first full pay period on or after 1 July, and payroll teams update their systems.

2026 is not that kind of year.

The changes stem from two separate processes operating simultaneously: the Fair Work Commission's gender-based undervaluation review of the Children's Services Award 2010, and the standard Annual Wage Review. The two overlap in timing, interact with the Worker Retention Payment, and together require operators to manage three distinct adjustments across a five-month window.

The gender-based undervaluation review, explained

In mid-2024, the Fair Work Commission identified the Children's Services Award 2010 as a priority award for its gender-based undervaluation priority awards review. The finding reflected a workforce that is 97.1% female and evidence that wages had been structurally suppressed by the historical undervaluation of care work.

The Commission conducted hearings and sector consultations across 2024 and 2025. On 10 December 2025, the Expert Panel for pay equity in the care and community sector handed down its final determination: staged wage increases to correct the identified undervaluation, alongside a simplified classification structure.

One important boundary: this determination applies only to the Children's Services Award 2010. Educators and teachers covered by the Educational Services (Teachers) Award 2020 are not subject to the same staged increases. Providers with staff under both awards need to manage the two sets of obligations separately. The Fair Work Ombudsman has published a detailed guide to the changes for providers working through classification mapping.

What changed on 1 March 2026

The first tranche of the gender undervaluation changes took effect from 1 March 2026 and did two things at once.

A new classification structure

The existing Children's Services Award classifications, which ran across multiple streams and 36 minimum rates, were consolidated into eight levels:

  • Level 1: Introductory Educator
  • Level 2: Educator
  • Level 3: Qualified Educator
  • Level 4: Experienced Educator
  • Level 5: Advanced Educator
  • Level 6: Room Leader
  • Level 7: Assistant Director
  • Level 8: Director

Every employee covered by the Children's Services Award needed to be assessed against the new structure from 1 March 2026. Staff engaged before that date map across from their old classification; staff engaged on or after 1 March 2026 go straight into the new levels. Services that hadn't completed that classification review by the effective date were immediately exposed to underpayment risk.

A 5% wage increase

Alongside the new structure, all minimum rates under the Children's Services Award increased by 5% from 1 March 2026. For services participating in the Worker Retention Payment program, the required minimum WRP dollar amounts also shifted as the award base moved, because the WRP top-up is calculated as a percentage above the award rate.

The 30 June 2026 increase

A second 5% increase under the gender undervaluation determination took effect on 30 June 2026 for all Children's Services Award employees. This is the second stage of a multi-year correction schedule that continues with further staged increases on 30 June 2027 and 30 June 2028 (with some classifications receiving a final adjustment in 2029).

The cumulative effect of the two gender undervaluation stages, before the July Annual Wage Review, was a meaningful uplift in base rates across every classification level.

The 1 July 2026 Annual Wage Review

On top of the gender undervaluation changes, the Fair Work Commission's 2026 Annual Wage Review decision increased modern award minimum wages by 4.75% from the first full pay period on or after 1 July 2026. The National Minimum Wage increased by just under 6% to $26.44 per hour ($1,004.90 per week, up from $24.95 per hour).

The 4.75% modern award increase applied to both the Children's Services Award 2010 and the Educational Services (Teachers) Award 2020.

Current minimum rates from 1 July 2026

From 1 July 2026, the minimum award rates for employees covered by the Children's Services Award under the new classification structure are:

  • Level 1, Introductory Educator: $28.81 per hour
  • Level 2, Educator: $29.69 per hour
  • Level 3, Qualified Educator: $32.47 per hour
  • Level 4, Experienced Educator: $34.65 per hour
  • Level 5, Advanced Educator: $36.57 per hour
  • Level 6, Room Leader: $38.25 per hour
  • Level 7, Assistant Director: $40.00 per hour
  • Level 8, Director: $46.12 per hour

For services participating in the Worker Retention Payment program, the required WRP minimums are higher: from $30.06 per hour at Level 1 to $48.11 per hour at Level 8. The full rates, including the detailed mapping from pre-March 2026 classifications for legacy employees, are published on the Department of Education website.

The Worker Retention Payment in 2026

The federal government's Worker Retention Payment remains a critical part of the financial picture for most long day care and outside school hours care providers.

On 17 June 2026, the government extended the WRP until 30 June 2028. The extension also brought two notable changes to the program.

For the first time, Family Day Care and In Home Care services that engage all educators as employees became eligible to participate. And the fee growth cap for WRP participants increased from 4.2% to 5.8%, giving providers slightly more room to adjust fees while maintaining program eligibility.

The structural principle of the WRP has not changed: the WRP absorbs the gender undervaluation increases. The required WRP minimum rates incorporate the undervaluation adjustments, and as the award base rises, the required top-up in dollar terms decreases proportionally, because the percentage is applied to a higher base. Services must ensure payroll systems reflect this dynamic interaction correctly.

WRP funds must be applied strictly to wages and eligible on-costs. They cannot be used for general operating costs, administration expenses, or profit. Providers must maintain clear financial records demonstrating correct application. Misallocation may trigger funding recovery action.

What this means for your centre's finances

Labour is the largest cost line in any childcare centre, and the 2026 changes compound across multiple adjustments in a short period. The financial impact varies by service depending on staffing mix, classification profile, existing wage arrangements above award, and WRP participation. Services paying close to award minimums face the most direct impact from each adjustment. Services already paying above award may have absorbed some of the uplift within existing arrangements.

What matters more than the current-year impact is the forward trajectory. The gender undervaluation increases don't stop in 2026. Further staged adjustments are locked in for 30 June 2027 and 30 June 2028. Financial modelling that accounts only for the current year's changes will underestimate what's coming.

Understanding your centre's financial position against these changes requires accurate labour cost modelling against your specific classification mix and occupancy levels. Labour costs as a proportion of revenue are the primary driver of margin in childcare, and sustained wage reform makes proactive modelling more important, not less.

What operators need to do now

Confirm your classification mapping. Every employee covered by the Children's Services Award must be correctly classified under the new eight-level structure from 1 March 2026. If that review has not been completed, it needs to happen now. Misclassification creates underpayment liability that compounds over time.

Check your payroll system. Systems that haven't been updated with the post-July 2026 rates are processing wages incorrectly. The new rates apply from the first full pay period on or after 1 July 2026. If your system is not dynamically adjusting to the correct rates for each classification, a manual reconciliation is required.

Review your WRP compliance. If you receive Worker Retention Payment funding, confirm that the required WRP minimum rates (not just the award minimums) are being applied to eligible employees, and that funds are being recorded and directed correctly. The two sets of minimums are different, and applying only the award minimum when WRP minimums apply is a funding breach.

Model the forward cost trajectory. The next staged increase hits 30 June 2027. Operators who understand the projected cost trajectory across 2027 and 2028 can make informed decisions about fee structures, staffing models, and occupancy targets while there is still time to act.

Update employment contracts. Where pay rates in contracts reference specific dollar amounts rather than award rates, those contracts may require updating. Rates that were current in February 2026 will now be below the legal minimum.

Frequently asked questions

What is the Children's Services Award minimum wage from 1 July 2026?

From the first full pay period on or after 1 July 2026, minimum rates range from $28.81 per hour for an Introductory Educator (Level 1) to $46.12 per hour for a Director (Level 8). For services receiving Worker Retention Payment funding, the required minimum WRP rates are higher: from $30.06 per hour at Level 1 to $48.11 per hour at Level 8. The applicable rate depends on both the employee's classification and whether they were engaged before or after 1 March 2026.

Does the gender undervaluation increase apply to early childhood teachers?

No. The gender-based undervaluation determination applies to the Children's Services Award 2010 only. Teachers covered by the Educational Services (Teachers) Award 2020 received the 4.75% Annual Wage Review increase from 1 July 2026, but the separate staged undervaluation increases do not apply to them. Providers must manage the two award obligations separately and ensure they don't incorrectly apply one set of rules to staff under the other award.

When is the next staged wage increase?

The next stage of the gender undervaluation increases under the Children's Services Award takes effect on 30 June 2027, with a further increase on 30 June 2028. Some classifications have a final adjustment on 30 June 2029. In addition, the annual Fair Work Commission wage review will deliver a separate increase from 1 July 2027.

Can childcare centres increase fees to offset the wage increases?

Services participating in the Worker Retention Payment program face a fee growth cap, which has increased from 4.2% to 5.8% for WRP participants from 2026. Services not participating in the WRP are not subject to this cap. For WRP participants, any fee increase above the cap risks loss of WRP eligibility, so fee decisions need to be made with the cap in mind.

What happens if my payroll is not updated in time?

Underpayment of the minimum award rate is a Fair Work compliance matter. If employees have been paid below the applicable minimum rate since 1 July 2026, the service is required to remediate back to the effective date of the change. Identifying and correcting errors early reduces exposure. Persistent underpayment can attract Fair Work Ombudsman investigation and penalties.

Staying on top of it

Managing a childcare centre's finances through sustained wage reform requires clear visibility over the numbers: what your current labour cost looks like against occupancy-driven revenue, how the forward staging changes that picture, and what levers are available.

This is the core of what ELM's financial management partnership delivers. We work with centre owners and operators to ensure their financial position is accurately understood, proactively managed, and positioned to remain viable as the wage reform schedule continues.

If you want a clear view of how the 2026 wage changes affect your specific centre's financial model, reach out to the ELM team or start with a Discovery Pack.

Sources