Their long-running disputes over safety, pay and conditions came before the Fair Work Commission for a hearing on Friday.
Premier Dominic Perrottet last week threatened to terminate the enterprise agreement for rail workers if industrial action continued, declaring negotiations over.
The threat came after the Rail, Tram and Bus Union's month of industrial action disrupted commuters across several days, and prompted the unions appealing to the commission for continued bargaining.
The commission's deputy president Bryce Cross rejected Sydney Trains and NSW TrainLink applying to enter conciliation on Friday, after they opposed conciliation when securing an adjournment to gather evidence on Tuesday.
Friday's hearing continued, however the parties will seek conciliation on Monday and Tuesday under Commissioner Bernie Riordan.
Conciliation involves informal explorations of agreements the parties could voluntarily reach, while tribunal hearing outcomes are limited by the law.
Unions have been negotiating an enterprise agreement for rail workers after the current one expired in May 2021.
A sticking point remains the RTBU's insistence on modifications to a Korean-built fleet of new intercity trains, which it argues are not yet safe to operate in NSW.
The tribunal heard terminating the agreement would potentially allow the government to introduce the trains without union approval.
Modifying the trains so guards can monitor platforms would ensure safety, the union says, and save about 450 guard jobs.
Ingmar Taylor SC, representing unions (excluding the Communications, Electrical and Plumbing Union), argued the government breached good faith bargaining by terminating negotiations, while itself acknowledging progress was being made.
The government delayed responses to proposals, did not clearly identify decision-makers or ensure they attended meetings, Mr Taylor argued.
Harry Dixon SC, representing government train entities, said ministerial intervention did not equate to bad faith bargaining, and the agencies could negotiate under instructions in their absence.
Ministerial commentary had a negative impact on negotiations, undermining workers' rights and leading to them being abused, Mr Taylor said.
Mr Dixon suggested union-alleged abuse from the public was motivated by disruption caused by industrial action.
RTBU organising director Toby Warnes "categorically rejected" that, saying members reported being called "terrorists" and "bastards", the same words politicians used in public statements.
Mr Warnes said the union can exceed the government's three per cent cap on annual public sector wage rises, because they are in the federal system.
"It does not affect the way that the Fair Work Commission approves our agreement," he said.
Asked if he was suggesting rail entities could ignore the policy, Mr Warnes said they could "run a position up the chain" to the government setting it.
If the government exceeded the cap for rail workers, it would risk having to do it for teachers, nurses, and others, Mr Dixon said.
The unions secured a rise above the cap in 2018, which did not flow to those other workers, who are already pushing for wages above the cap even if they cannot secure them under the regulations, Mr Warnes said.
The cap was raised to three per cent this year, the same rate the union secured in 2018, as negotiations continued.
Mr Dixon said it was repeatedly made clear unions would not secure a pay rise above the cap, and statements from representatives saying they would are a bargaining strategy.
Mr Warnes said the union still sought a 3.5 per cent annual wage rise, with an additional cost of living supplement based on a Queensland government model.