Why more casuals have converted to permanent employment at Woolworths than McDonald’s

It has now been almost two years since the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021 (Cth) amended the Fair Work Act 2009 (Cth) to create a right for casual employees to be converted to permanent. While the drafting of these provisions left much to be desired, we are now starting to gain an understanding of how this conversion right is being accessed by employees and managed by employers.

The casual conversion right 

To quickly recap, in March 2021, a new casual conversion right was inserted into section 66B of the Fair Work Act 2009 (Cth). This compels an employer to offer a casual employee an opportunity to convert to permanent employment, but only if the employee has been employed for 12 months and during at least the last six months of that period, the employee has worked a regular pattern of hours on an ongoing basis that the employee could continue to work without significant adjustment.

However, an employer is not required to make this offer if there are “reasonable grounds” not to do so. Reasonable grounds might include the following:

1. The employee’s position will cease to exist in the next 12 months;
2. The employee’s hours of work will significantly reduce; and/or
3. There will be a significant change in the days or times of work that the employee is unable to accommodate. 

An employer must notify the employee if it decides not to make an offer and include the grounds upon which it has decided not to do so. If an employer decides to make an offer, the employee must respond within 21 days. If the employee accepts, the employer must then discuss and give written notice of the terms of the permanent employment within a further 21 days. 

If a dispute arises, the parties must first try to resolve it at the workplace level, failing which, it can be referred to the Fair Work Commission for conciliation or arbitration by consent. 

Management by employers and uptake by employees

Given the onus rests on employers to make the offer of casual conversion, most businesses should now have a process in place to regularly assess whether they need to offer casual workers the option to convert. To what extent though are employers complying with this obligation, and when doing so, how is the offer being made?

The Senate Select Committee on Work and Care has provided valuable insight into these questions. The Committee was appointed to inquire into the impact that combining work and care responsibilities has on the wellbeing of workers, carers, and those they care for. 

In this context, on December 20, 2022, the Committee received evidence from senior employees at McDonald’s Australia and Woolworths Group, which touched upon workplace flexibility and casual conversion. 

McDonald’s: less than 1% converted

After a low rate of casual conversion uptake, McDonald’s chief people officer Emma Napoli Hala cited flexibility to choose hours and loading rates as key reasons why employees did not want to convert. Out of the approximately 10,000 employees that initially went through the casual conversion process, McDonald’s reported to the Committee that less than 1% decided to become permanent full or part-time employees.

Arguing that the Fast Food Award was a barrier to conversion, Napoli Hala said the Award set out rules concerning fixed start and finish times that were not attractive to their casual workforce, and that greater flexibility within the Award would result in more part-time workers.

Working on a seven-day rostering system, casual crew members at McDonald’s have the freedom to select times that are convenient for them to work using the company’s MyJob platform before each roster is published. Any changes made by a casual are accepted automatically by the system. By comparison, part-time employees need to engage with a manager or supervisor through MyJob regarding changes in their availability to ensure any award obligations are still being met or leave requests are processed correctly, removing some of the flexibility afforded to casual workers. 

Of McDonald’s approximately 109,000 crew members (83% of which are casuals), the average age is 18 years old, so it is no surprise that some 70% of their employees are at high school, TAFE or university. In addressing the Committee, Napoli Hala said she believed the company’s causal workforce enjoyed the flexibility casual work gives them to work around their studies. Data collected by the Australian Bureau of Statistics (ABS) in a report on the analysis of changes in casual conversion lends some backing to that theory, with 18- to 24-year-old workers converting to non-casual work less than those aged 24 to 54.

Woolworths: 37.5% converted

On the other end of the scale, Woolworths reported to the Committee that 37.5% of its casual workers accepted offers to convert from casual to permanent employees; a higher rate than the Committee has otherwise heard. At present, casual workers make up the second largest proportion of Woolworths employees at 40%, just below part-time workers, which make up 44%. 

Woolworths’ commitment to offering casual conversion centres around a focus on going over and above minimum requirements set within the enterprise agreement and the law. General manager Mark Van Den Bosch told the Committee that regular engagement between managers and their teams about conversion contributed to the high uptake and allowed the business to utilise their existing team members, saving on recruitment efforts.

Van Den Bosch reported that it was in both the company’s and team’s best interests for work to be guaranteed on a contracted basis with access to entitlements such as annual and carer’s leave to maintain a meaningful workforce. Interestingly, Labor Senator Deborah O’Neill said that Woolworths is the first retail employer to highlight advantages for employees in having access to entitlements, adding that the concept of flexibility can sometimes be good for business but detrimental to the mental health and wellbeing of employees.   

Diving further into flexibility, Van Den Bosch said for the majority, permanent work is in their best interests, but some people are prepared to forgo entitlements for the benefit of flexibility. The Woolworths rostering system allows casual and part-time workers to “flex up” and take on additional hours, with allocations going to full-time workers first and then using part-timers and casuals to fill gaps, and doesn’t roster employees at times they have marked themselves as unavailable.

Like McDonald’s, Woolworths is a significant employer of people aged 16 to 25, with employees in this age bracket making up 40% of their team. 

Why the discrepancy?

The ABS Technical Data Report found that casual conversion rates peaked just before the changes in legislation came into effect but have since been trending down. Data showed casual transition rates reached 14.9% in February 2021 but at February 2022 were down to 12.8%, despite the proportion of casual employees in the workforce changing just point one of a percent. So, what are the barriers preventing employees from converting? 

The key socio-economic and demographic factors highlighted within the report suggested the age, industry, tenure, and skill level of the workforce influenced whether respondents were more likely to convert to non-casual employment. Industries with the highest take-up included mining, professional services and wholesale trade. 

Given the high conversion rate reported by Woolworths, it could be said that employer encouragement and a culture that values workers’ need for stability and access to leave (or their choice to remain flexible) do play a role in whether employees choose to remain casual or convert to permanent. Encouraging managers to regularly assess their obligation to offer casual workers the option to convert and track conversion rates allows businesses to use their existing workforce better and identify opportunities for improvement. 

Introducing the casual conversion right into the Fair Work Act 2009 (Cth) was a helpful and positive step, but conversion uptake will seemingly only come when it is well managed and encouraged by employers and employees become both aware of the right and comfortable exercising it.

Trent Hancock is a principal and co-founder of Jewell Hancock Employment Lawyers.

Disclaimer: This article should not be construed as legal advice and is not intended as such. If readers wish to obtain advice about anything contained in this article, they should speak with a lawyer and discuss their individual circumstances.