The crew of the Caltex-chartered Alexander Spirit have staged a week-long sit-in, refusing to leave the ship or sail to Singapore, where they will be laid off and replaced by foreign workers on a new international route.

In an attempt to head off the 36 job losses, the Maritime Union of Australia says it will appeal a Fair Work Commission decision on Tuesday that ordered that the seafarers cease their industrial action.

Embattled Alexander Spirit crew member Joanne Kerin said news of the lay-offs, which they heard from dockworkers before being informed by management, had been heartbreaking.

"It's really disgraceful and underhanded the way they did it," Ms Kerin said. "I was getting ready to refinance my house when I got home, now I'm going to have to sell it."

The decision to shift the 40,000-tonne ship to international crew and voyages follows the closure of another Australian oil refinery – this time in Brisbane where the Alexander Spirit had picked up fuel for an east-coast run.

Caltex said the use of foreign crew was consistent with the practice involving hundreds of other ships importing goods to Australia. The ship's operator, Teekay, said the crew would receive their full entitlements under their enterprise agreements.

But opposition infrastructure spokesman Anthony Albanese said the dispute was a foretaste of new federal legislation to open Australian shipping to foreign vessels, which he described as "WorkChoices on Water."

"What we're seeing is a conscious government decision to replace Australian workers with foreign workers, with foreign wages," Mr Albanese told ABC radio.

"This is a government that talks a lot about boats but doesn't want to see the Australian flag around the Australian coast, because that is what will happen under this policy."

Employment Minister Eric Abetz said on Monday the government's proposed changes played no part in the dispute.

"It is a real issue when it costs more to ship sugar from Brisbane to Melbourne for the confectionary industry than it does to buy the whole lot and ship it from Thailand to Melbourne," he said.

The Alexander Spirit would be the fourth Australian-crewed fuel tanker to be removed in the past 12 months, leaving just one remaining in coastal trade, according to the MUA.

ACTU president Ged Kearney, who attended a protest rally in Devonport this week, said the shift raised questions for the future of the maritime industry, for fuel security and environmental protection.

Unions said foreign-crewed "flag of convenience" ships in Australian waters used exploited foreign labour, paid as little as $2 an hour, while their lax safety standards risked a repeat of a 2010 incident when a Chinese bulk carrier, Shen Neng 1, slammed into the Great Barrier Reef

Fair Work Commissioner Ian Cambridge said in ordering the Alexander Spirit crew's industrial action to stop that he rejected their claim that poor handling of the dismissals meant there was a risk to health and safety if they were required to make the voyage to Singapore.

"Although I may personally have great sympathy for the crew of the Alexander Spirit, the predicament that these individuals face is, in essence, a predicament that is broadly shared by many other Australian workers.

"The prospect of sailing the Alexander Spirit to Singapore may, for example, be contemplated in similar fashion to those vehicle manufacturing workers who assemble the final Falcon, Commodore and Camry."

The MUA's appeal of the Fair Work Commission's decision will be heard before the full bench on Friday morning.

Shipping operator Teekay said while it regretted the need for the 36 workers' redundancies, it expected the crew to comply with the commission's orders if the decision is upheld.

MUA national secretary Paddy Crumlin said the Abbott government's proposed shipping law reforms meant "this scenario will be played out many times across the country".

"Tasmanian Senator Jacqui Lambie went on board the Alexander Spirit earlier this week and spent more than an hour with those on board," he said.

"We think all of the Senate crossbenchers should go on board so they can see first-hand the impact that these sorts of purely commercial decisions by profitable companies such as Caltex have on workers and their families."