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NSW Premier Chris Minns has rejected an offer from the rail unions over industrial action on Sydney's train network.
In a last minute proposal, the Rail, Tram and Bus Union (RTBU) said it would stop the action until January 7 if the government offered commuters free public transport fares.
RTBU NSW branch secretary Toby Warnes told ABC News Breakfast the state government should accept the "peace deal".
"We think this is a sensible way forward and we think that the government should embrace this considering some of the rhetoric we've heard," Mr Warns said.
"We'd encourage the government to continue to consider that offer as well as the businesses … that have filed against us in the Fair Work Commission."
But the premier rejected the union's offer and said "nothing is off the table" for New Year's Eve if the government loses their legal case against the rail unions on Tuesday.
Toby Warnes said his union's offer was "sensible". (ABC News: Patrick Thomas)
The NSW government argued fare free days would be too costly for NSW taxpayers and push strikes into next year.
Mr Minns said he had "stupidly" agreed to fare free days to avert industrial action twice over recent months, saying he has since lost trust in negotiating with the unions.
"The government has to draw a line in the sand, acknowledge that we've given a fair offer and ask for the industrial dispute to be over," Mr Minns said.
"For me to agree to the rail union's terms today I think would be inviting more industrial chaos, next New Year's Eve, next Christmas, next Easter, all the way into the future."
On Christmas Eve the Fair Work Commission will consider submissions from the state government and businesses seeking to stop the ongoing industrial action.
Luna Park, Ryan's Hotel Group and Laundy Hotels are among those businesses who lodged submissions with the commission, asking it to suspend the action because of economic reasons.
The RTBU, which represents Sydney Trains workers, has called for a 32 per cent pay rise over four years, or an 8 per cent annual increase.
Mr Minns said it was a cost the government could not afford and would lead to an increase in public transport fares for commuters.
"What it would mean under those circumstances is literally a massive increase in the amount of fares that are charged to NSW commuters if we agree to that salary increase," he said.
Chris Minns said fare free days would be too costly for NSW taxpayers. (ABC News: Ethan Rix)
"We're asking them [the RTBU] to be reasonable. If they don't want to sit down and work out an agreement now, then we would ask them to pull all industrial action over the coming period of time.
"I think this is a bit of a game but the game is unfortunately at the expense of the people of Sydney."
Sydney Trains said hundreds of train services were cancelled or delayed at the weekend, with an additional 60 train services delayed on Monday.
Transport Minister Jo Haylen said no level of industrial action was tolerable for the Sydney train network on New Year's Eve.
"We need to run 3,600 services across a 46-hour period of continuous service to move millions of people in and out of the CBD," Ms Haylen said.
"No level of industrial action is tolerable to not only get people where they need to go but to do that safely."