A mass teacher strike is set to go ahead in Victoria after the state government failed to secure an injunction stopping the action.
Federal Court Justice Christopher Jessup said the government had not persuaded him during Thursday's hearing that the teachers' looming industrial action would be both unprotected and unlawful.
"I propose to refuse the applications," he said.
Justice Jessup also said the state had allowed too much time to pass before it launched legal action claiming the Australian Education Union (AEU) and Community and Public Sector Union (CPSU) had "overstepped the constitutional limitation" through their planned action.
Michael McDonald SC, for the state government, told the court the unions' action would hamper fresh enterprise bargaining talks between the parties.
"This process will be undermined if industrial action goes ahead," he told the court.
The government also argued the 24-hour work stoppage by teachers next Thursday would cause a "very substantial level of disruption", with Mr McDonald saying the last statewide strike left 362 schools without teachers.
Justice Jessup questioned the government's motive for seeking an injunction two years after the pay dispute began.
"If your case was a good one, it might've been the subject of this very litigation eight to nine months ago," he said.
Finance Minister Robert Clark said the government was disappointed the court failed to grant an interim injunction requiring the unions to call off their industrial action.
But he says legal action is continuing, with the government asking the court to rule that a range of items in the unions' log of claims cannot be included in the enterprise bargaining agreement (EBA), rendering future industrial action unlawful.
"The state shares the frustration of students and their parents at the ongoing disruption being caused by the Australian Education Union's and the Community and Public Sector Union's industrial action," Mr Clark said in a statement.
"The best way to end this disruption is for the AEU and the CPSU to call off their industrial action."
Mr Clark said the government is disappointed pay negotiations have been going for so long.
"The AEU's latest proposal, if not matched by productivity offsets, remains way beyond government wages policy and is unsustainable," he said.
Departmental negotiators will continue to hold meetings with the AEU.
The dispute is set to continue in court, with Justice Jessup ordering a directions hearing on February 22.