Health Workers Union boss Diana Asmar is seeking to halt a civil case because criminal charges against her are "on the cards", a court has been told.
The Fair Work Commission launched Federal Court proceedings against Ms Asmar in August, alleging she falsely claimed more than $120,000 as relevant business expenses.
It's also claimed she authorised more than $2.7 million to be paid to a printing business that invoiced for products and services that were never received.
Ms Asmar's husband David, Health Services Union branch president Rhonda Barclay and union officials Kerry Georgiev, Nick Katsis, David Eden and Lee Atkinson, are also listed as respondents to the civil case.
The commission will allege the senior officers at the health union's Victorian branch approved payments or allowed their unique personal banking tokens to be used by the branch’s finance manager to make payments.
The alleged conduct occurred between 2016 and 2021.
Ms Asmar and the six other respondents did not appear at the Federal Court in Melbourne on Tuesday for a case management hearing.
But Ms Asmar's barrister, Yasser Bakri, told the court his client was seeking a stay on the proceedings because it was "reasonably possible" she would face criminal charges for the same alleged offending.
"The words used by the authorities are that (charges are) on the cards," Mr Bakri said.
Lawyers were completing their stay application and would lodge it with the court next week, Mr Bakri said.
Barrister Matthew Minucci, appearing for the commission, told the court the respondents should still be required to provide their defence to the court as the stay application was yet to be lodged.
However, Mr Bakri argued it would be unfair and prejudicial to his client if they were made to start preparing a defence with the knowledge the whole case could be paused.
Justice Craig Dowling agreed, allowing the respondents to wait for the outcome of the stay application before lodging their defences.
He also ordered Ms Asmar's lawyers file their stay application by no later than 4pm on September 12.
Another case management hearing in the matter has been listed for September 24.
The Health Workers Union represents 18,000 workers across Victoria in public and private hospitals, pathology, disability, aged care services and other industries.
Outside court, Victorian Health Minister Mary-Anne Thomas said she was "gutted" to hear about the allegations.
"I felt that this was a betrayal of those workers," she told reporters on Tuesday morning.
The national union's secretary Lloyd Williams last month said he was horrified by the claims.
"Our union has no tolerance for misuse of members funds and it’s important to specify that this is isolated to the Victoria Health Workers Union branch," Mr Williams said in a statement.
