Unions are concerned about the Fair Work Commission’s scrapping of a NSW coal terminal agreement.

The owners of the Port Kembla Coal Terminal south of Sydney have successfully argued that its agreement with workers has made it uncompetitive, with the Fair Work Commission giving the green light to scrap the agreement.

Management had argued that the conditions in the existing agreement were too generous.

Workers were earning an average wage of $130,000, 22 per cent superannuation and 100 paid sick days a year.

The company said the deal made exporting coal out of Port Kembla up to 300 per cent more expensive than competing ports.

The FWC imposed a 12-month delay before the deal can be scrapped, which unions say shows that it is not a good decision.

The South Coast Labour Council says the decision is a “major setback” for the company and its shareholders.

Council secretary Arthur Rorris said delaying the termination by 12 months would make the issue significant in the upcoming NSW and federal elections.

“It's quite unheard of, even with the laws as they are skewed so heavily towards the company, that you actually have a one-year waiting period for the company to move in with its plans,” Mr Rorris said.

“It's basically saying there were real doubts there, and I think you can be assured that examples like this and others will be featured very prominently in both industrial campaigns and the elections themselves.

“That's something that New South Wales Labor is going to have to have a very close look at as we approach the election, to see whether we need to get back into the business of regulating industrial relations at a state level.

“There has to be a better way to do this. Certainly in the next plus 12 months there will be two elections, state and federal, and these issues will no doubt be front and centre in communities such as the Illawarra.”