Yarra Trams has failed in its legal bid to have Thursday's planned strike across Melbourne's tram network called off.

The network will shut down for four hours from 10:00am as part of a pay dispute between the operator and the Rail, Tram and Bus Union (RTBU).

Last Friday, union members rejected Yarra Tram's latest pay offer of a 15 per cent rise over four years, if staff agree to work a 14-day roster.

The RTBU said the parties were still a long way off reaching an agreement.

Yarra Trams asked the Fair Work Commission to terminate the strike on the basis it would endanger the safety and welfare of Melbourne residents who rely on trams.

At a late night hearing on Tuesday, the commission dismissed the application, finding the strike would undoubtedly affect the travelling public but there was no evidence to support the safety claims.

The commissioner urged the union and Yarra Trams to continue negotiations today.

In a statement, Yarra Trams said it "shares our customers' frustrations that industrial action will affect their travel plans".

"Our first priority is the safety of our passengers, employees and the community and we will ensure that all contingency plans consider the wider community's safety at all times," it said.

"We are committed to continuing to provide the best service and information that we can to our customers."

Yarra Trams has 'lost respect of its workers': union

Phil Altieri from the RTBU said he was disappointed by Yarra Tram's attempt to stop the strike.

"The commissioner's decision obviously vindicates our view. There is no danger to people's lives," he said.

"We regret putting the public in inconvenience but at the end of the day we've been negotiating for four-and-a-half months, 28 meetings and we're not getting anywhere.

"We feel this is the only thing left for us unless they come with a better offer.

"The way Yarra Trams have gone about painting their workers as greedy, selfish individuals, they haven't played a good game.

"They've lost the respect of the workers."

Public Transport Minister Jacinta Allan said both parties needed to consider the affect industrial action would have on the general public.

"They're the ones who are going to be hurt with trams potentially not running," she said.

"The Government has been talking to both parties, urging them to stay at the negotiating table.

"There's still time time to reach an agreement and avoid disruptions to tram services."

Opposition spokesman David Hodgett said the Government should step in and play a direct role in the negotiations.

"Daniel Andrews and the Government plays a role here to get the parties to the table, to negotiate a fair enterprise agreement," he said.

"If the four-hour strike goes ahead, our tram network's going to be thrown into chaos.

"This is a sign of things to come and you've got to ask yourself who's running the state? Daniel Andrews or the unions?"

Public Transport Victoria said there would be limited replacement buses in place at key locations along the St Kilda Road corridor, hospitals and Melbourne University.

Last week the union called off a simultaneous train and tram strike, after Metro Trains and Yarra Trams agreed to return to the negotiating table.