Drivers will set a 10km/h speed limit on all light rail services in the city from Monday, as part of escalating industrial action, the Rail, Tram and Bus Union said on Wednesday.
The speed limit will only be lifted if the NSW government cut passenger fares to 50 cents, the union added.
But Transport Minister Jo Haylen said the government won't get involved in the dispute as it was a wages issue between private operator, Transdev, and the union.
"Ultimately, we want everyone to sit down and work it out," Ms Haylen told ABC radio on Wednesday.
"But 50 cent fares are not on the table."
Cheaper fares have become a rallying cry for the union since becoming a roaring success and winning bipartisan support in Queensland.
Following a separate stand-off with the union over heavy and metro-rail services, the NSW government agreed in September to providing free fares over a weekend of major sport fixtures.
Sydney light rail fares start at $3.20 for an adult and rise to $5.60 for trips exceeding eight kilometres.
Sydney commuters could face slow light-rail trips as industrial action heats up. (Dan Himbrechts/AAP PHOTOS)
The latest industrial action follows a 24-hour shutdown in June and peak-hour strikes in July as 18 months of negotiations with the light-rail operator stalled.
The union has been calling for a pay rise of 23 per cent over four years, while Transdev is offering a 18 per cent increase.
"Wages and conditions are effectively going backwards while negotiations stall - instead of sending out inferior offers without consulting with the (union), Transdev needs to engage with its workforce and negotiate in good faith," tram and bus divisional president Peter Grech said.
While the coalition privatised the light-rail system, Labor could step in and support the workers' fight by cutting fares, he said.
Transdev had not scheduled any meetings with the union to resolve the dispute, Mr Grech added.
"The company hasn't come back to the table to negotiate with us," he said.
"We now want either Transport for NSW or the NSW government to negotiate."
Transdev was contacted for comment.
The industrial dispute is another headache facing the Minns Labor government as multiple unions representing frontline workers agitate for better pay and conditions for workers.
Public sector surveys, released on Melbourne Cup Tuesday, showed reduced morale and pay satisfaction among critical workforces.
Only one in three police and health workers said they were paid fairly for their work, declining eight points and four points on the 2023 results respectively.
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