Secondary Employment in New Zealand

It’s becoming more common for staff to have a “side hustle”, a second job, or freelance work outside their main role. For small businesses, that can be totally fine - until it isn’t.

If you employ people in New Zealand, it helps to understand what secondary employment is, what risks it can create for your business, and how to manage it fairly (and legally) from day one.

This article breaks down secondary employment, why it matters to employers, and practical steps you can take to protect your business while still being a fair and flexible employer. It’s general information only and not legal advice.

What Is Secondary Employment (And Why Does It Matter For Employers)?

At its simplest, secondary employment is when an employee has another job or paid work outside their primary employment.

In practice, secondary employment can look like:

working part-time for another employer on weekends
running an online store or service business after hours
doing casual shifts for a competitor “to top up income”
contracting or freelancing in the same industry
being a director or shareholder of another company

From an employer perspective, the issue usually isn’t that your employee is motivated or wants extra income. The issue is whether their secondary work creates risk for your business, such as:

conflicts of interest (especially if it’s with a competitor or a client/supplier)
fatigue and health & safety risks (particularly in physical or safety-critical roles)
performance issues (lateness, reduced productivity, mistakes)
misuse of your confidential information
misuse of company time, tools, or intellectual property
damage to your reputation (e.g. your employee holds themselves out as connected to your business)

Getting clear on what secondary employment involves is helpful - but the real win is setting expectations early, so you’re not trying to fix the problem after trust has already broken down.

Can You Restrict Secondary Employment In NZ?

There isn’t a single blanket rule that says employees can or can’t have second jobs. In New Zealand, it’s generally lawful for someone to have secondary work - but as an employer, you can often set reasonable limits to protect legitimate business interests (usually through the employment agreement and workplace policies).

The key word here is reasonable. If a restriction goes further than necessary, it may be difficult to enforce and could create employee relations risk.

Common Employer Approaches That Tend To Be Reasonable

Requiring disclosure of secondary employment (so you can assess risks upfront).
Restricting work for competitors during employment, especially where there’s genuine overlap in services, customers, or confidential information.
Preventing use of business resources (time, equipment, customer lists, materials) for outside work.
Setting rules around fatigue for safety and performance reasons, particularly where the job involves driving, machinery, night shifts, or physical work.

Approaches That Can Be Risky If Not Handled Carefully

a blanket “no second jobs” rule for all employees, regardless of role or risk
restrictions that effectively stop someone earning income outside work when there’s no genuine conflict
trying to enforce an “approval” requirement without a clear contractual basis, or where refusal isn’t reasonably connected to a legitimate business risk
making assumptions (rather than investigating) about whether outside work is affecting performance

The safest approach is to build clear rules into your Employment Contract and support it with a practical conflict management process.

Key Legal Issues For Employers: Conflicts, Confidentiality, And Restraints

When secondary employment becomes a legal problem, it typically comes back to a few core risk areas. Here’s what you should watch for as a small business employer.

1) Conflicts Of Interest

A conflict of interest can arise where an employee’s personal interests (including income from secondary work) compete with their duties to your business.

Examples include:

an employee working for a competitor or starting a competing business
an employee referring your customers to their own side business
an employee being involved with a supplier and influencing purchasing decisions

Conflicts aren’t always “bad faith”, but you still need to manage them. Having a clear Conflict Of Interest Policy makes it easier to require disclosure and respond consistently.

2) Confidential Information And Customer Relationships

Even if an employee isn’t working for a direct competitor, secondary work can increase the chance of confidential information leaking, such as:

pricing and margins
supplier terms
marketing strategies
client lists and key contacts
product designs or internal systems

In New Zealand, employers commonly manage this through well-drafted confidentiality provisions (and, where appropriate, carefully tailored post-employment restraints). If you’re relying on “common sense” rather than written clauses, it becomes much harder to enforce expectations when something goes wrong.

It’s worth ensuring your agreement includes an appropriate Confidentiality Clause that actually matches how your business operates (rather than a generic template).

3) Restraint Of Trade / Non-Compete Clauses

Sometimes you may want to limit an employee from competing with you during employment, or after they leave. This is where restraint clauses can come in, but they need to be approached carefully.

In NZ, restraints are only enforceable to the extent they’re reasonable and necessary to protect a legitimate business interest (for example, reasonable in duration, geography, and scope). If you go too broad, you risk the clause being found unenforceable (in whole or in part).

If this is relevant to your business (for example, you’ve got key staff with customer relationships or sensitive information), getting a tailored Non-Compete Agreement or restraint clause is usually a smart investment.

Performance, Fatigue, And Health & Safety: Where Employers Can Get Caught Out

One of the most common “real world” impacts of secondary employment is fatigue. And fatigue isn’t just a productivity issue - it can also become a health and safety issue.

Under the Health and Safety at Work Act 2015, you have duties to take reasonably practicable steps to ensure the health and safety of workers while they are at work. If an employee is consistently fatigued because they’re working late-night shifts elsewhere, the risk of incidents, injuries, and mistakes can go up.

This is especially important if your business involves:

driving (company vehicles, deliveries, transport)
operating machinery
construction or trades
healthcare or support work
night work or long shifts

What Can You Do (Practically)?

You generally can’t “control” what someone does outside work - but you can manage the risks when it affects your workplace.

Set clear expectations that secondary employment must not impact safety or performance.
Ask reasonable questions if you have genuine concerns about fatigue (for example, if incidents or near misses occur).
Document concerns and meetings in case you need to follow a performance management process later.
Apply rules consistently (inconsistent enforcement creates legal and culture issues quickly).

If you’re already dealing with performance issues and suspect secondary employment is contributing, it’s important to follow a fair process. Employment disputes in New Zealand often turn less on what you suspected, and more on whether you acted reasonably and gave the employee a fair chance to respond.

How To Manage Secondary Employment With The Right Contracts And Policies

The easiest time to manage secondary employment is before it becomes a problem. That means having the right legal foundations in place from day one - in writing.

Here are the key documents and clauses most small business employers should consider.

1) Employment Agreement Clauses (The “Non-Negotiables”)

Your employment agreement is your first line of defence. A well-drafted agreement can:

require employees to disclose secondary employment (or, where justified for the role, to seek consent before certain types of outside work)
prohibit conflicts (like working for competitors or soliciting your customers)
set expectations around confidentiality
deal with intellectual property created during employment (where appropriate)
support performance management if outside work impacts their role

If you’re hiring, updating templates, or scaling your team, it’s worth tightening this up early with a tailored Employment Contract.

2) Conflict And Disclosure Policies

Even with a strong contract, you’ll want a consistent internal process so everyone understands what you expect. A policy helps you:

define what your business considers a “conflict”
set out what must be disclosed (and when)
explain what happens if there is a conflict
document disclosures, approvals and any conditions (e.g. “okay, but not for our clients”)

This is exactly the kind of operational clarity a Conflict Of Interest Policy is designed to provide.

3) Privacy And Monitoring (Be Careful Here)

Sometimes employers want to “investigate” secondary employment by checking devices, CCTV, emails, or timesheets. This is an area where small businesses can accidentally create privacy risk.

If you collect, use, or monitor personal information about workers (even for legitimate reasons), you need to handle it carefully under the Privacy Act 2020. The rule of thumb is: only collect what you need, be transparent where possible, keep it secure, and don’t use it for unrelated purposes.

It helps to have your internal rules clear in advance (for example, what monitoring occurs on company devices and how it’s used). A tailored Employee Privacy Handbook can set expectations and reduce misunderstandings.

4) Restraints And Non-Competes (Use Sparingly, Draft Carefully)

If your employee has access to key customers, pricing, strategy, or trade secrets, you may want to consider a restraint clause or separate restraint agreement. The goal isn’t to “trap” employees - it’s to protect genuine business goodwill.

Done well, restraints can help protect your business when someone leaves and starts competing immediately. Done badly, they can be unenforceable and create resentment. If restraints are relevant to your industry, getting tailored advice (and using a properly drafted Non-Compete Agreement) is the safer path.

A Practical Process For Employers When Secondary Employment Comes Up

Even with good documentation, you still need a fair and workable process when an employee discloses secondary employment (or when you suspect it’s causing issues).

Here’s a simple framework that works well for most NZ small businesses.

Step 1: Identify The Risk (Not The Emotion)

Start by clarifying what your concern actually is. For example:

Is it competition?
Is it a conflict (clients/suppliers)?
Is it fatigue/safety?
Is it use of company time/resources?
Is it confidentiality?

This matters because your response should be targeted. A blanket “no” without a clear reason is where disputes can start.

Step 2: Check The Contract And Policies

Before you meet, review what the employee has agreed to in writing, and what your policies say. If you don’t have clear clauses, you can still manage issues - but you’ll need to be especially careful to act reasonably and consistently.

Step 3: Have A Proper Conversation And Give A Chance To Respond

In many situations, a calm meeting solves the issue quickly. Ask what the work involves, the hours, and whether there’s overlap with your business. If you’re considering imposing conditions (or declining to consent where your contract requires consent), explain your reasons and let them respond.

Good faith and fair process are central themes in NZ employment law, including under the Employment Relations Act 2000. In practice, this means avoiding snap decisions, keeping an open mind, and making sure the employee has a fair opportunity to be heard.

Step 4: Confirm The Outcome In Writing

If you approve secondary employment (or agree it can continue), consider confirming any conditions in writing. For example:

no work for competing businesses
no solicitation of your customers
no use of your time or equipment
must not affect performance or punctuality
must not create fatigue that impacts safety

This isn’t about being heavy-handed - it’s about avoiding confusion later.

Step 5: If There’s Misconduct Or Performance Issues, Follow A Fair Process

If an employee breaches the rules (for example, competing, using your client list, or working during paid hours), treat it as a workplace issue and follow a fair investigation and disciplinary process.

If you jump straight to dismissal without proper steps, you increase the risk of a personal grievance. If you’re unsure, it’s usually worth speaking with an Employment Lawyer early, before the situation escalates.

Key Takeaways

Secondary employment refers to an employee having additional paid work outside their primary job, including side businesses, freelance work, or other employment.
Secondary employment isn’t automatically a problem, but it can create real business risks like conflicts of interest, confidentiality breaches, fatigue, and performance issues.
Employers can often set reasonable limits through a well-drafted employment agreement, particularly around conflicts, confidentiality, and use of company resources.
Fatigue from secondary employment can become a health and safety issue under the Health and Safety at Work Act 2015, especially in higher-risk roles.
If you’re gathering information or investigating concerns, be mindful of the Privacy Act 2020 and ensure your workplace monitoring and information-handling practices are clear and lawful.
The best approach is to manage secondary employment proactively with tailored contracts and policies, and handle any issues with a fair, well-documented process.

If you’d like help updating your employment agreements or policies to manage secondary employment in a practical (and legally compliant) way, we’re here to help. You can reach Sprintlaw on 0800 002 184 or email team@sprintlaw.co.nz for a free, no-obligations chat.

Secondary Employment In New Zealand: Employer Legal Risks And Obligations