A Queensland contractor has been forced to pay $200,000 for snubbing a tiler because they didn't have a deal with a union.

Forest Meiers Construction chose not to hire the subcontractor for a $2.5 million job at a development in Hamilton, Brisbane, in 2016.

The tiler didn't have an agreement with the CFMMEU (Construction Forestry Maritime Mining and Energy Union) but said it would pay union rates for the project.

But the contractor said it had been contacted by the union and threatened with industrial action if it hired the tiler.

It instead engaged a rival tiling company when the union refused to enter into an agreement with the first company, with the Federal Circuit Court finding the move in breach of the Fair Work Act.

AAP