Prime Minister Edouard Philippe on Monday announced that the government would propose a bill to authorise the use of ordonnances in the middle of March.
The controversial method, which President Emmanuel Macron's government used to push through its labour reform last year, curtails parliamentary debate on specific proposals without abolishing it altogether.
Earlier Jean-Claude Mailly, of the Force Ouvrière union, said that such a move would be "pouring oil on the fire".
His union, which is weak in the SNCF rail company, is to join a day of protest called by the more powerful CGT and Sud-Rail union on 22 March.
In the light of the decree threat, those two unions will meet with two others, UNSA and the CFDT, on Tuesday to discuss possible strike action, which could start on 12 March.
The government is to open a two-month consultation with the unions and SNCF management next week and hopes parliament will have passed its "key principles" by the summer.
"The situation is alarming, not to say untenable," Philippe said on Monday. "The French people, whether they take the train or not, pay more and more for a public service that works less and less well."
The network has a mounting debt that stood at 46.6 billion euros at the end of 2017 and has been hit by several problems linked to ageing equipment in the last few months.
Opening to competition
The first phase of consultation will concentrate on opening up the network to competition by 2019, as required by European Union law.
Philippe denied that meant preparing for privatisation.
The state will keep shares in the company if its status is changed, as proposed in a report by former Air France boss Jean-Cyril Spinetta, he said, and the network "is part of the French people's heritage and will remain so".
The government has, as expected, also adopted Spinetta's proposal to phase out railworkers' special employment conditions, which guarantee a job for life and retirement between the ages of 50 and 55.
Cost-cutting, job flexibility
It will order the company to draw up a plan to improve services and change management practice, including cutting costs, expanding job flexibility, increasing productivity and training in new skills.
But it has not adopted Spinetta's proposal to cut branch lines, following an outcry from MPs and local politicians in rural areas.
“Concerning the SNCF, there are two big taboos: one is the specific professional status they have and the other is the pension system," Bruno Cautrès of the Paris Institute of Political Studies told RFI. "The prime minister said he would not reform the pension system, so the game is, ‘I won’t reform the pensions, but I’m reforming your status, and I don’t want the newcomers to have exactly the same status as before.’ ”
The government belives it has public opinion behind it on changing SNCF employees' status, he says. "Many people consider they have a privilege, which is that they can work less, they can retire earlier and they also have good salaries."
But industrial action is probable.
“It’s going to be difficult, because the union reactions have been strong," Cautrès says. "They talk about an unacceptable attack on the SNCF and the public sector and they want to broaden the perspective and say it’s not only the SNCF but it’s the first step in fundamentally reforming the public sector in France.”
"I'm not looking for confrontation with anybody," Philippe said on Monday. "But if certain questions get bogged downs during the consultations, because of attempts at obstruction or a stalemate in the balance of forces, if some people try to hijack the rail debate to subvert it into an ideological debate with no relation to the French people's transport needs, then the government will face up to its responsibilities."