A labour hire firm embroiled in an alleged fraud scandal involving Victoria's Big Build has been suspended from major rail projects. Morson International, a third-party supplier for the Metro Tunnel project, has been banned by network operator Metro Trains amid a probe into alleged overcharging and fraud.

"We have suspended a third-party supplier, Morson International Pty Ltd, today pending further investigations into potential overcharging or fraudulent activity," Metro Trains said in a statement on Monday, according to the Australian Associated Press.

“We expect the highest level of standards from all suppliers who provide services to Metro and we won't tolerate any actions that do not meet the required standard,” Metro Trains added.

Premier Daniel Andrews said the state government has made its expectations clear to contractors and subcontractors working on its major projects, warning rule-breakers would face punishment.

"Where an issue arises it's only right that steps are taken with that particular hire company and work is done to establish exactly what's happened," he told reporters at Victorian parliament. “Be in no doubt there'll be sanctions, but let's wait to see what that investigative process delivers."

Government projects are on fixed-price contracts, meaning taxpayers will not foot the bill for any additional costs passed on from subcontractors to contractors.

"We won't be paying more because they didn't deliver the highest standards," Andrews said. "So it's coming out of their margin, coming out of whatever profit they might make from that particular build. However, it is important to deliver projects in good time and good value for the taxpayer."

The Office of the National Rail Safety Regulator last week confirmed it was also investigating fraud allegations.

The regulator is probing claims of underpaid allowances to workers, along with claims of ‘ghost shifts’, where shifts were not filled despite workers being rostered on.

Project managers on the Metro Tunnel and level-crossings removal program were reportedly billed for up to three shifts performed by one worker in a 24-hour period.

Victoria's Big Build is delivering more than 165 major road and rail projects, including Metro Tunnel, a second underground railway for Melbourne, with five new stations.

Morson in Melbourne does not form part of the Morson Group, headquartered in the UK. Morson Group sold the brand rights to Morson in Melbourne, which is a separate business and uses the Morson name under a trading licence.