The IRC made its decision on Thursday after hearing the NSW government's controversial bid to freeze pay rises for public sector employees for 12 months.

The Berejiklian government wanted to freeze pay rises to guarantee jobs for public servants amid the COVID-19 pandemic and to free up funds for job-creation projects.

The wage policy was opposed by unions and frontline workers, including paramedics, nurses, police officers and teachers, who had been seeking to get their 2.5 per cent annual pay rise.

The policy headed to the IRC after it was blocked in state parliament in June when Labor and crossbench MPs united to pass a disallowance motion in the upper house.

The commission on Thursday found public servants are entitled to maintain the real value of their earnings as is consistent with the government wages policy and a pay freeze would see a 0.3 per cent reduction in the real value of their earnings.

NSW Treasurer Dominic Perrottet said the IRC move supported the government's intention to prioritise job creation in a bid to reignite the economy.

But the decision was slammed by unions, with many describing it disappointing and a slap in the face.

"Today is a kick in the guts for every public sector worker that got us through not only bushfires but COVID," Unions NSW secretary Mark Morey told reporters on Thursday.

Mr Morey said unions would review the decision and consider their legal and industrial options.

Public Service Association general secretary Stewart Little said the outcome affects workers who have stopped the pandemic from overwhelming hospitals, schools, prisons and the community.

"We see this decision as absolutely diabolical," he told reporters.

NSW Nurses and Midwives Association general secretary Brett Holmes said it was a "disgraceful" outcome for nurses who had been putting their lives and their families at risk amid COVID-19.

NSW Teachers Federation president Angelo Gavrielatos described the ruling as "nothing short of an insult".

Australian Associated Press