The long-running dispute between the NSW government and rail workers is being heard by the industrial relations umpire after a last-minute attempt to avoid the hearing was rejected.
The government last week threatened to terminate an existing enterprise agreement for rail workers, prompting the union's appeal to the commission to keep it at the negotiating table.
The commission's deputy president Bryce Cross rejected an application by the state government on Friday morning to adjourn and enter conciliation.
Harry Dixon SC, representing government train agencies Sydney Trains and NSW TrainLink, opposed conciliation at a hearing on Tuesday and secured the adjournment to gather evidence.
Mr Dixon argued on Friday it beggared belief the commission would not approve its application after earlier encouraging conciliation, but Mr Cross did not agree.
"I don't think that's a very accurate recollection of history," he said.
"The initial response (to conciliation) from respondents was no, on more than one occasion, and now we're at the commencement of the hearing," he said.
Unions have been negotiating a new enterprise agreement for rail workers after the current one expired in May 2021.
A sticking point remains the Rail, Tram and Bus Union's insistence on modifications for a Korean-built fleet of new intercity trains it argues are not yet safe to operate on the NSW rail network.
Modifying the trains to allow guards to monitor platforms on approach and departure would ensure safety, the union says, and save about 450 jobs.
The union took industrial action throughout August, causing delays for commuters across several days and culminating in the threats of termination that brought the dispute to the commission.
Ingmar Taylor SC, representing the union applicants (excluding the Communications, Electrical and Plumbing Union), argued on Friday the government breached good faith bargaining by terminating negotiations, while also acknowledging progress was being made.
They did not clearly identify who the ultimate decision-makers were or ensure they attended meetings, and delayed responses to proposals put forward in negotiations, Mr Taylor argued.
Public comments from government ministers also had a negative impact on negotiations, and undermined freedom of association and collective bargaining, the unions said.
RTBU organising director Toby Warnes told the hearing the NSW government's three per cent cap on annual public sector wage rises, which the unions have sought to exceed, does not apply to them.
"Our position has always been it does not apply to us because we operate in the federal system, and it's merely just a government position," Mr Warnes said.
"The policy is not binding on us, it does not affect the way that the Fair Work Commission approves our agreement."
Asked whether he was suggesting the two government rail entities, Sydney Trains and NSW TrainLink, could just ignore the policy, Mr Warnes said they could "run a position up the chain" to the government that set it.
Mr Dixon said it was made clear to the unions, on multiple occasions, that they would not get a pay rise above the cap, and public statements from representatives saying they would secure the pay rise was a bargaining strategy.
Mr Warnes said the union sought a 3.5 per cent annual wage rise, with an additional cost of living supplement based on a Queensland government model.
"So not withstanding the position that has been made clear by the government, your union still presses for more pay?" Mr Dixon asked.
"Yes," Mr Warnes said.
The tribunal has indicated the matter may move to conciliation next week.
The hearing continues.
