But less than an hour after a majority - made up of Labor, Greens and cross-bench Upper House members - voted to disallow the freeze, the government confirmed it would take the matter to the Industrial Relations Commission.

It came after news earlier in the day that the paramedics' union was encouraging ambulance workers to take industrial action by not putting patients' addresses on paperwork as of Monday night so they could not be billed.

The union was also encouraging members to use chalk to write messages about the importance of paramedics on the side of ambulance vehicles.

NSW APA president Chris Kastelan said the paperwork ban meant government revenue from ambulance call-outs would be "significantly down" but it would not affect access to patient care or response times.

He told the Newcastle Herald news of the planned wage freeze had been a "real kick in the guts", before the vote to block the move on Tuesday afternoon.

The government said previously the freeze on a planned 2.5 per cent increase on public sector wages was expected to create $3 billion in savings, which it could then use on infrastructure and creating new jobs.

But in the chamber on Tuesday, Labor's Upper House leader Adam Searle said the move would harm the state's economy.

"The government's plan is not the least-worst option or the one that does the greater good," he said.

"It will sabotage consumer confidence, consumer spending and undercut and lead to the loss of private sector jobs."

Finance and small business minister Damien Tudehope said current unemployment and wage figures in NSW were "gut-wrenching" and the government was focused on job creation.

"Behind the numbers are real people ... for those who have hung onto their jobs, many have had to take a pay cut - we are talking about real pay cuts, not just a wage pause," he said.

"People are being faced with the choice between accepting lower pay or no pay at all because otherwise their employer just can't afford to keep them on."

After the vote, Mr Kastelan told the Newcastle Herald he was pleased to see the legislation was not "steamrolled through parliament".

"It's not really a win for us, it's just we live to play another day," he said.

"We get to take our case to the IRC [Industrial Relations Commission]. I guess what today shows is that the parliament ... feels it's not a fair and reasonable resolution by the government."

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