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Understanding 20 Hours ECE & Home-Based Top-Up Payments

Early childhood education (ECE) is hugely valuable — not just for children’s learning, but also for helping families participate in the workforce. In New Zealand, the 20 Hours ECE scheme is an important part of that support.

However, it doesn’t always mean “no cost” in every situation — particularly within home-based education. Below is a clear guide to how it works, why top-up payments exist, and what it means for families and educators alike.

What is 20 Hours ECE?

  • The 20 Hours ECE scheme is a government initiative that allows eligible children to receive up to 20 hours per week of early childhood education.
  • It covers a maximum of 6 hours per day, up to 20 hours per week.
  • The funding is paid directly to the ECE service (centre or home-based provider), not to parents or educators.

At first glance, “20 Hours ECE” can sound like “childcare is free for 20 hours.” In reality, it’s more nuanced — especially for home-based care, which receives lower government funding than teacher-led centre services.

Why home-based care can involve a top-up payment

Because home-based services receive lower funding than centre-based services, the Ministry of Education allows what’s called a home-based educator top-up payment.

This ensures educators can continue to receive their full hourly rate, by allowing parents to pay the difference between the government subsidy and the educator’s standard rate.

Key points about top-up payments:

  • The subsidy passed through for 20 Hours ECE may not cover the full cost of the educator’s hourly rate — the top-up bridges this gap.
  • A top-up can only be charged for the 20 Hours ECE period if the pass-through rate is lower than the educator’s usual rate.
  • The top-up must be clearly documented, and parents must be fully informed.
  • The top-up cannot exceed the difference between the subsidy pass-through and the educator’s normal hourly rate.

Example:

If an educator’s usual rate is $8 per hour and the service passes through $6 per hour for 20 Hours ECE, then a $2 per hour top-up may be charged for those hours.

A note on funding and “free ECE” marketing

It’s important to understand that while the government provides funding for 20 Hours ECE, this is not a payment that covers all costs of early childhood education — and it’s not paid directly to families or educators.

The funding Nurture@Home receives contributes toward operational costs such as educator support, professional guidance, curriculum development, compliance, and quality assurance.

In a home-based setting, parents pay their educator directly, and the 20 Hours ECE subsidy is passed through by Nurture@Home to help offset those costs.

Unlike home-based services, centres and kindergartens receive significantly higher funding rates from the Ministry of Education and are also paid directly for the hours children attend. This allows them to sometimes advertise “free ECE,” even though those costs are being met by higher government subsidies rather than the complete removal of fees.

You may also see some services promoting offers such as “20 Hours ECE for 2-Year-Olds” — however, this is not part of the official 20 Hours ECE scheme. Government funding for 20 Hours ECE begins when children turn three years old (or earlier for those who qualify under specific criteria). These offers are purely marketing promotions, not Ministry-funded entitlements.

At Nurture@Home, we believe in keeping things transparent and honest. We ensure families understand exactly how 20 Hours ECE works, what the funding covers, and what portion of costs are contributed by families.

When did these rules change?

The Ministry of Education’s ECE Funding Handbook (Chapter 4, Section 4-3) outlines home-based educator top-up payments as part of the rules governing 20 Hours ECE.

In 2024, a regulatory amendment further clarified that licensed home-based educators can require top-up payments for hours covered by the 20 Hours ECE scheme.

These updates aim to give both educators and families clarity — ensuring the system remains transparent and fair.

What this means for families

  • If your child attends a home-based service and your educator’s standard rate is higher than the 20 Hours ECE pass-through rate, a top-up payment may apply.
  • You’ll receive clear documentation showing the educator’s normal rate, the subsidy pass-through, and the top-up amount.
  • You won’t be charged a full fee for 20 Hours ECE — only the allowable top-up, where applicable.
  • Any hours beyond the 20 hours (or beyond the 6-hour daily limit) can be charged at the educator’s normal rate.

Families may also be eligible for other financial supports, such as the Childcare Subsidy for additional hours, or FamilyBoost rebates through MyIR.

What this means for educators and services

  • Clearly identify what’s covered by the 20 Hours ECE pass-through and what is a top-up.
  • Be transparent with families — share your rates and document any changes.
  • When setting your rates, consider how top-ups affect accessibility and equity.
  • Stay up to date with Ministry guidance to ensure your practice remains compliant.

Final thoughts

The 20 Hours ECE scheme plays an important role in making early education more affordable. For home-based services, top-up payments help maintain fair remuneration for educators while keeping costs clear and consistent for families.

The key is transparency and fairness — everyone should understand what’s funded, what’s a top-up, and why it exists.

If you ever have questions about top-up payments or how the 20 Hours ECE rules apply to your situation, our Leadership Team is always happy to help. 🌸

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