Fair Work Commission Approves Wage Increases For Early Childhood Sector
The Fair Work Commission has recently handed down a decision that will make a big difference for early childhood services organisations and their staff. As part of a broader review into gender undervaluation, the Commission has confirmed that educators working under the Children’s Services Award will see their wages increase over the next five years.
From 1 July 2025, wages increased under the award by 3.5%, with the possibility of further phased increases to follow.
What do organisations in the Early Childhood Sector need to do?
- Review your award compliance:
It is crucial to understand which awards apply to your staff and whether they are being paid appropriately under those awards. As noted above, awards are subject to regular changes and can be highly complex. For example, Victorian Early Childhood Teachers and Educators Agreement in Australia (VECTEA) will change in response to this Fair Work decision, making compliance a continual process. We recommend seeking an external review of your award compliance every few years to ensure ongoing alignment with the requirements.
- Ensure your base rates under an Enterprise Agreement are above the minimum:
Ensure that your base rates are at least equal to, or higher than, the relevant award. With the recent 3.5% increase, it is important that your EA rates remain above the minimum wage requirements.
- Anticipate future increases:
In its preliminary decision in April 2025, the Fair Work Commission flagged wage increases of up to 23% for certain staff over the next five years. It is important to factor these potential rises into your future budgets. We are still awaiting the government’s response on how the sector will fund these increases, so now is the time to review your workforce structures and staffing mix.
- Monitor the Fair Work Commission for updates:
Further changes in the sector are expected, so it is important to remain informed and up to date.
For further insights, see our recent articles:
- Rising Wage Costs Ahead: How Gender Equality is Reshaping the SCHADS Award – exploring how the Fair Work Commission’s decision is affecting other sectors.
Frequently Asked Questions
- Who does this wage increase apply to?
The increases apply to staff covered under the Children’s Services Award. Other agreements (like VECTEA or Enterprise Agreements) may also be impacted depending on your organisation.
- How much are wages increasing and when?
From 1 July 2025, wages increased by 3.5%. Further phased increases are expected over the next five years, with some roles potentially seeing rises of up to 23%.
- What if my organisation operates under an Enterprise Agreement (EA)?
Your EA rates must remain equal to or higher than the minimum award rates. You may need to review and adjust your EA to remain compliant.
- Do we need to pass on the 3.5% increase if we’re under an Enterprise Agreement and already paying above the award?
Not necessarily. Your obligation is to ensure your Enterprise Agreement rates remain at least equal to or higher than the updated Children’s Services Award rates. If your EA rates are already above the new minimums, you don’t automatically need to apply the same 3.5% increase. However, you should:
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- Review the terms of your EA to check if it links increases directly to award movements.
- Monitor future phased increases to make sure your EA rates don’t fall below the award over time.
- Will the government provide funding support for these wage increases?
Generally the Federal Government increases funding in line with award increases; however we are yet to hear of any additional increases to further support the sector. You should begin planning and budgeting for higher wage costs now.
- How do I know if my staff are being paid correctly under the new award?
Awards are complex and subject to change. A payroll or award compliance review is the best way to ensure your staff are paid correctly.
Need help preparing for the changes?
Our team can assist with workforce financial modelling, projecting the impact of wage increases and reviewing your cost structures as you plan for these changes. We also undertake Payroll Reviews, focusing on controls, processes and ensuring staff are paid in line with award requirements. We’ll continue to keep you updated as the rollout progresses and can help you work through what these changes mean for your organisation.
Contact us today to discuss how we can support you in preparing for these changes.
