The new teacher, a mother in her 30s with two children, has been working as a prostitute to supplement her income, the Herald on Sunday reported.
The newspaper, which did not name the teacher or her school, said a parent told the teacher's principal, who was balancing a possible negative reaction from parents with the woman's right to work in a job that has been legal in New Zealand since 2003.
It has been referred to the school's board of trustees, which will meet in committee to debate whether to ignore the issue, discipline the teacher or ask the Teachers' Council to decide.
The woman reportedly told the principal that her action in her own time was not his concern, and that it was not affecting her ability as a teacher.
Teachers Council director Peter Lind said the most important factor was whether the teacher's second job was affecting her teaching duties, "and there would have to be actual evidence".
Employment lawyer John Hannan, who knew of the case, said a school could possibly take action even if it didn't have a policy either preventing teachers taking secondary jobs or ensuring they first seek approval from their board. "It's a case of whether the outside employment is regarded as incompatible with the role of a teacher in terms of role-modelling and in terms of any policies that the board of trustees might have in place."
Another employment lawyer, Patrick Walsh, said the council could intervene if the school deemed the teacher's second job involved "conduct that brings discredit to the profession".
Prostitutes Collective national coordinator Catherine Healy said there were several teachers who had second jobs as prostitutes.
Frances Nelson, the president of the Education Institute, the union for 97 per cent of primary school teachers, said some teachers had secondary employment for various reasons, and it was up to individual schools as to whether they had to seek approval. But it was the first case to her knowledge of a teacher moonlighting as a prostitute.
If the teacher was a member of the NZEI, the union would support her through any employment process, she said.
Two years ago, an Auckland policewoman was disciplined after it was discovered she had an extra job as a sex worker. The woman kept her police job after an investigation.
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