Heads may roll at Tasmanian health departments, following strong allegations of nepotism and misconduct.

Senior department boss Jane Holden has been given 48 hours to explain why she should not be booted from public service.

Tasmania's Integrity Commission has found Ms Holden and an alleged colleague, Gavin Austin, abused their positions by unfairly employing family members.

But legal authorities have questioned the commission’s actions in releasing the report before the end of investigation.

The commission says Ms Holden failed to declare a conflict of interest when employing long-time colleague Mr Austin, giving him generous terms and conditions in his government role as well.

It said Ms Holden also created a job for her husband, and Mr Austin employed his wife in 2010 and son in 2011.

The inquiry found Mr Austin also disseminated consultancy work to friends and associates without proper process. He has been suspended, pending further investigation.

The issue was raised by a health department official on Tasmania’s King Island, who noticed that work on the island’s hospital was not being given to local construction firms.

Rather, Ms Holden’s mainland builder husband was given the job.

She says she will “vigorously” defend her innocence.

“The issue here is that the report does not include all of the evidence and I have every intention that the public sees all of the evidence and this issue is discussed in an open and transparent way,” she told ABC Radio on Wednesday.

“I did not create the job for my husband and I did not in any way ensure that he got it, and there is evidence to support that I did not.

“A decision was made that the [North-West Health Organisation] would send a team over, not just my husband, but he was one of at least two qualified builders asked to go over there on contract for that and that is how that happened.

“It wasn't a scheme, it wasn't some conniving thing,” she said.

Ms Holden has denied a pre-existing friendship with Mr Austin.

Australian Lawyers Alliance's Greg Barns has criticised the Integrity Commission report.

He says it was unusual that the commission’s report had named the pair specifically, and that making it public without follow-up inquiries was “effectively hanging these people out to dry without them being entitled to have their say”.