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 to sort out blatant violations of workers' rights. Having to wait months for a simple meeting is justice denied," he said.
Contractors, such as local lawyers and employment advise 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 MoBIE. 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."
Megan Williams of HR & Dispute Solutions said she would be willing to provide the government service if it was contracted out "but the service that is there at the moment works very well and I use it regularly".
She and two other employment advocates, Wendy Kazianis and Bryan King had teamed up to create a dispute resolution centre.