I see two issues:
1. They don't have to reduce your hours; if you can't do this other job without reducing your hours, or intend to perform the work while "working" for your current job, your employer has the right to object.
2. They don't have to be happy about your competing with their services. A non-compete clause restricts you from competing with them after your employment ends - but its absence does not mean that they have to tolerate your competing with them while you remain employed by them.

