Three Yarra Trams employees have been stood down pending an investigation, following complaints about a strip show hosted at the Brunswick tram depot Christmas party.
The Andrews Government has weighed into allegations about the lewd performance at the party, which was run by the depot's employee-run social club.
"While this is a matter for Yarra Trams, it's an incredibly disappointing incident that clearly doesn't meet community expectations," a government spokeswoman said.
It is understood that Yarra Trams received two complaints from employees who attended the party at a restaurant in the inner-north for depot employees.
The entertainment was provided by a "fat-o-gram", a name given to a plus-size stripper, but Yarra Trams would not confirm this.
It is believed the Christmas party was held on December 3 at Aghadeer Restaurant Brunswick, a kebab and pizza function centre on Sydney Road.
Fairfax Media has confirmed the stripper's name was Chantel and that she arrived scantily dressed in a French maid's outfit before she performed for an elderly Yarra Trams employee who was retiring at the end of last year.
The event was separate to the Yarra Trams corporate Christmas party and is understood not to have been sanctioned by the operator.
Yarra Trams confirmed an independent investigation has now been launched into the incident, including an audit of the funding for the party. It is believed that the club is partly funded by the company and partly funded by the employees.
Yarra Trams will also review the role of social clubs at all seven suburban depots.
"The actions of the event organisers are unacceptable and do not align with Yarra Trams values," he said.
"Action is being taken to prevent this happening again."
Aghadeer Restaurant Brunswick declined to comment.
- with Melissa Cunningham