Public service bosses asking workers to stay at their desks longer might be wasting their time, according a landmark review of Australia's industrial relations laws.

But the Productivity Commission says that departments must get "hard-headed" on their approach to sacking under-performers with policy decisions best made at agency level.

The commission's long-awaited review of the Fair Work laws urged a rethink of accepted notions of public service "productivity" for the benefit of future APS bargaining processes, not the one currently underway.

The review's authors noted that the longer working hours or the loss of entitlements like Christmas shutdowns currently being pushed by departments across the service were genuine productivity gains but they meant little or nothing if employees were paid to trade them away.

Likewise, the commission found asking employees to hang around the office longer in exchange for pay rises might do more harm than good.

"Paying an employee to work more could harm productivity, if the worker's effectiveness falls in those additional hours," the review states.

Canberra mandarins would do better to look to technology for genuine productivity gains delivered through better performance of departments' "core activities", according to the commission.

"This relates more to the adoption of new processes and technologies, rather than simply working harder or changing the mix of entitlements in a worker's overall compensation," the review said.

"A well-publicised example is scope for the reduction in travel expenditures resulting from more widespread use of video and teleconferencing, fuelled by technological improvements, and the complete demise of the large typing pools that existed in the 1980s."

The commission also turned its attention on the perennial public service problem of dealing with under-performers and the notoriously difficult task of showing them the door if they did not lift their games.

The commission found "anecdotal" evidence of the difficulties of tackling under-performing public servants, including high rates of union membership, gun-shy managers and a working culture that put great emphasis on procedural fairness.

"Over-extending this requirement may have resulted in unnecessarily lengthy, costly and inflexible performance management and termination procedures," the commission team wrote.

As Public Service Commissioner John Lloyd works on sweeping reforms to make it easier to remove slackers from the Commonwealth workforce, the Productivity Commission warned that simply ripping out existing protections across the board might have unintended consequences.

Agencies being hit with higher compensation bills from unfair dismissal action was a concern noted by the Productivity Commission.

"It is difficult to ascertain the impacts of excising such terms from enterprise agreements," the commission wrote.

"Given many people have strong preferences for job security, and therefore resist easy dismissal, excision might require higher levels of compensation.

"Otherwise it would risk detrimental changes to productivity or morale."

There was also a risk that the cultural commitment to procedural fairness might be so ingrained in public service workplaces that changes to the rules might not have much effect on the way things were done.

The commission came to the view that the tasks of simplifying performance management and dismissal procedure were best done at agency level, where the particular risks and rewards were best understood.

"Consequently, the decision to remove or not such provisions should involve a hard-headed practical assessment of the trade-offs, a task best undertaken at the agency level," the review said.