In a deal blasted by business leaders, who say it will distort construction wages across Canberra and drive civil contractors to the wall, the tram builder has negotiated with the construction union to directly employ as many as 250 workers.

The agreement, yet to be signed, pays ordinary wages of $30.23 an hour for first-time workers, rising to $42.55 an hour. On top of that is a "project allowance" of $5.50 an hour, which folds in a range of award allowances, plus a daily travel allowance of $32.75, paid for work days and rostered days off.

Construction staff will work 40 hours a week, but be paid for 36 hours and get 26 paid rostered days off a year. Each week, $98 will be paid into a redundancy fund for each worker, which they will get when their work on the project stops.

Afternoon and night shifts get a 50 per cent loading on top of ordinary pay. Overtime is paid at time-and-a-half for the first two hours, then double time. Double time is also paid after noon on Saturday and on Sunday, while double-time-and-a-half is paid on holidays.

Construction, Forestry, Mining and Energy Union assistant secretary Jason O'Mara said he was "flabbergasted as to why there's such a big deal around this agreement", which was standard in infrastructure projects.

The Master Builders Association believes the government will sign a contract this week with Canberra Metro to build and operate the tram and has called for a delay.

Canberra Metro plans to employ about 250 construction workers itself, and another 250 through subcontractors, but the ACT Civil Contractors Federation, whose members have rejected the CFMEU enterprise bargaining agreement this year, believes members will be bypassed on the build and those who do get work will be forced to pay inflated rates.

The union counters that there is no "jump up" clause in the proposed agreement, so subcontractors will not be forced to pay the higher rates.

Capital Metro Minister Simon Corbell said on Monday the government was seeking "a good health and safety record, fair treatment of employees, making sure that they pay proper wages and proper conditions" from all contractors on the tram build.

Mr Corbell rejected Master Builders' claim that taxpayers will wear the bill for the inflated wages. The final price remains under wraps, but in February it was announced as $698 million, plus or minus $35 million.

"The government will make very clear the costs associated with Canberra Metro in the coming days once the contractual negotiations are complete, but there is no movement to the cost of this project as a result of the employment arrangements between Canberra Metro and the union," Mr Corbell said.

"But it speaks for itself. Union EBAs deliver better wages and conditions ... At the end of the day this project will engage local labour, local workers, with better wages and conditions. That's a good thing for the economy and for those workers and their families."

Unions ACT secretary Alex White said it was extraordinary for Master Builders to seek government intervention to stop a collective agreement.

"It's remarkable. It's completely mad and highly inappropriate," he said.

He accused subcontractors of wanting to "take the cream off the top" while paying construction workers less for "back breaking work in dangerous conditions".

"This is one of the great lies about subcontracting. Adding in a subcontractor does not decrease the cost, it just decreases wages. The place where that money goes is into the profit margins of the subcontractors. What they're really saying is we're not getting our share of the profit margins."

He also rejected the argument from subcontractors that if they get tram contracts they will face an unmanageable situation of two workforces – one paid higher tram rates and one paid lower rates.

"Everyone should be getting a decent wage," Mr White said. "The objective of all the bargaining that we do is to lift up the entire workplace so you don't have people left behind."

The news that Canberra Metro plans to employ about 500 for the three-year build puts the government job analysis to the test. In 2014, a report commissioned by the government predicted 1450 direct jobs and another 2100 indirect jobs during the construction period, totalling 3560. Even that report warned the jobs were the "gross employment footprint", and should not be presented as the number of jobs "created", rather the number of jobs "supported".