Red tape forms a major threat to many public organizations around the world. Building on the Job Demands–Resources model, supplemented by arguments from the psychological process theory of red tape, this study explores how and when red tape affects teachers’ employability competences (i.e., balance, anticipation and optimization, and personal flexibility). Analyses ( N = 908 teachers; 92 school leaders) revealed a negative relationship between red tape, on one hand, and balance and personal flexibility, on the other hand, through perceived impact on work outcomes. Interestingly, the analyses also revealed that when organizations provide sufficient developmental rewards to their employees, the negative consequences of red tape on perceived impact are buffered, which indirectly also benefits employees’ balance and personal flexibility.