One of Melbourne's top Islamic schools hired more than a dozen teachers on illegal contracts and later falsified the paperwork and destroyed evidence by smashing a computer, a court has heard.

Lawyers acting for teachers from the Australian International Academy – formerly King Khalid College – have urged a judge to strike out the school's defence due to the destruction of key evidence.

In a case currently before the Federal Court, the Independent Education Union claims 13 teachers at the academy's Coburg campus were illegally hired on fixed-term contracts, which can only be used to plug gaps when teachers take extended absences from classroom duties.

The union said the school was entitled to hire just three teachers on fixed-term contracts under the teachers' award in 2012, but the school says in its defence that it was permitted to hire seven teachers on these terms. It also claimed some of the teachers named in the lawsuit had been hired as permanent staff from the outset.

Union officials who inspected school files said they found evidence that work contracts and letters had been tampered with to conceal wrongdoing.