NZ Post has agreed to stop what posties slammed as "secret eavesdropping" of workers using its electric delivery vehicles.

Controversy arose in August after the Postal Workers Union discovered the new "Paxster" vehicles record everything a postie says.

Union spokesman John Maynard told the Herald that while it was obvious there were cameras on the Paxsters, most employees were oblivious that NZ Post was making "continuous audio recordings while they are out driving" - including private phone calls and conversations with passersby. Maynard labelled it "secret eavesdropping".

Privacy Commissioner John Edwards took up the case, and said in a social media post this morning that NZ Post had agreed to stop audio recordings.

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The state-owned enterprise, which earlier suspended recordings while the Commissioner's investigation took place, told Edwards audio was recorded for safety reasons.

Edwards said it was not clear how audio recordings would help prevent crashes.

He also found NZ Post had breached Principle 3 of the Privacy Act, "as the delivery agent was not made aware of the fact that cameras were recording audio during his delivery round." (Employees also have to be made aware of any video cameras or video recording.)

And while Paxster-driving posties were in a work environment, Edwards found their employer had also violated Principle 4 of the Act, which includes the provision that recordings not be "unreasonably obtrusive".

Edwards said in his "case note" promoted to social media this morning, "The need to investigate possible incidents and accidents needed to be balanced with the delivery agent's right to maintain a reasonable degree of privacy and dignity, and that of the people with whom they interact as they make their round. The delivery agents spend a considerable amount of time in the Paxster vehicles and it would be unsettling for them, and unreasonable intrusive, to record audio during the entire time a Paxster is being driven."

An overhaul of the Privacy Act is currently making its way through Parliament.

The legislation includes many of the Privacy Commissioner's recommendations, such as compulsory data breach disclosure, but not his suggestion to ramp up fines to $1m for companies that breach the Act, and $100,000 for individuals.

As things stand, a $10,000 fine will be the maximum, and the bad publicity generated by his "case notes" Edwards' main weapon.

Another issue is that fines in the Privacy Bill are currently restricted to a narrow range of offences and likely would not have covered the Paxster incident, had NZ Post refused to co-operate, a spokesman for Edwards' office says.

Edwards is angling for financial penalties to apply to a broader range of violations.

The Privacy Commissioner made two oral submissions and one written submission to the select committee considering the bill. This morning, a spokesman for his office said it was too early to say if the changes would be taken on board.

The Justice Committee is due to report back to the House on November 22.