James Ashby had been seeking a grace payment from the federal finance department to recover his costs in his settled court case against former parliamentary speaker Peter Slipper.

Last year, a Federal Court judge knocked him back and on Thursday three appeal judges ruled the judge was correct. They dismissed Mr Ashby's appeal with costs.

Justice Robert Bromwich had found refusing Mr Ashby the grace payment "falls within the description of the Fair Work Act of being action that is authorised by or under a law of Commonwealth" and did not constitute adverse action.

"It is not in doubt that an important reason why the act of grace application was refused was because Mr Ashby chose to pursue the litigation against Mr Slipper and thereby to incur costs, when alternative and less costly remedies, including the exercise of other workplace rights, were available to him," Justice Bromwich said in his judgment last July.

Mr Ashby appealed on two grounds: that the judge erred in his interpretation of the finance department's authority and in concluding that refusing an act of grace application was legally authorised because Mr Ashby either had or had not exercised a workplace right.

The Full Court of the Federal Court found no merit on either ground.

Mr Ashby sued Mr Slipper in 2012, claiming his boss sent inappropriate text messages and made lewd remarks.

After two years in the courts, Mr Ashby dropped the sexual harassment legal action against the former federal Queensland MP as it approached trial.

A minister from the Gillard Labor government in 2012 permitted a grace payment for Mr Slipper's legal costs, creating what Mr Ashby said was a power imbalance.

Australian Associated Press