A former union official has accused the Australian Services Union of running an illegal slush fund to bankroll a Labor party faction.

Brenden Sheehan appeared briefly in the Federal Magistrates Court in Brisbane on Wednesday claiming the union dismissed him unfairly because he blew the whistle on the fund.

He wants to be reinstated and is seeking more than $1 million in compensation for being unfairly dismissed.

Mr Sheehan, 44, also told the court he wants a freeze on the slush fund.

He has been unemployed since the union's Queensland branch sacked him about four months ago.

He told AAP outside court his name has been "blacklisted" despite a 15-year union career.

Mr Sheehan is alleging the ASU Queensland branch set up the slush fund disguised as a social club fund that deducted money from employees' pay.

He claims the fund, worth about $180,000, was used to bankroll a Labor faction.

The matter has been adjourned until later on Wednesday.