Napier, Palmerston North and Dunedin Mediation Centres have been reportedly earmarked for closure.
Mr O'Neill said it could leave Wellington circuit mediators as the only help for Hawke's Bay dispute resolution apart from the courts' legal system.
"This would be a blow for vulnerable workers and their unions who need a quick and accessible service. Having to wait months for a simple meeting is justice denied," he said.
Contractors, such as local lawyers and employment advice services, could be contracted to supply the service but he said the Council of Trade Unions supported the retention of the current service. "The Napier office for mediation provides quick and local access to resolve employment problems, and is an essential part of MBIE. To close this office would be a denial of justice for vulnerable workers and their unions, and may create a flood of legal cases as lawyers replace mediation services."
"To close this office would be a denial of justice for vulnerable workers and their unions"
Unions Hawke's Bay convener Thomas O'Neill.
Brown & Bates employment lawyer Jol Bates said the Hawke's Bay private sector had unknown capacity in to pick up the statutory mediation service.
Many employment disputes needed to be dealt with urgently and if there was a backlog or the service was in Wellington there would be "inevitable delay".
"What I am anticipating, out of the delay, is unscrupulous employers and employees alike will try to exploit that delay," he said.
"Without early intervention in disputes, they tend to get more acrimonious."
He said it appeared a well-developed proposal was leaked from the Ministry and there was no sign of consultation with stakeholders "which includes employers and unions".
"We are well serviced here by the current model, where matters get resolved by two very experienced and skilled mediators."
Megan Williams of HR & Dispute Solutions said she would be willing to provide the government service if it was contracted out "but the service works very well and I use it regularly".
