Thirty-five positions are being axed at Work and Income as part of a review of back-office functions in its regional offices.
Opposition parties say that will pile more work on frontline staff at a time when they're already run off their feet following welfare changes which came into force last week.
Work and Income said on Thursday that staff were told earlier this week about the review and expects it to be finished by the end of the year.
National commissioner Carl Crafer says the welfare agency has changed since the last review 10 years ago and some older positions are no longer necessary.
However, he says no service centre or frontline roles will be cut and the process will not hinder changes to the welfare system.
Mr Crafer says there are likely to be 35 fewer roles across the 11 regional offices - but because of current vacancies that does not translate to 35 job losses.
The Labour and Green parties say frontline staff are already overworked.
Labour's social development spokesperson Jacinda Adern says they will now have to cope with fewer resources and enormous upheaval.
"Ask anyone who's working on the frontline if you don't have the people who are working at a supportive level behind you, then you're going to have issues on the front interface with clients.
"We're seeing people at a regional level now being told that they're going to go through a review right through to the end of the year which may result in their job not existing - that's just sounds to me like a recipe for chaos."
The Public Service Association says the union was left completely in the dark about the planned job cuts. National secretary Brenda Pilott says they are still trying to work out exactly what's going on.
"A lot of uncertainty still - we don't know which jobs are being talked about, we don't know where, we don't know exactly what process is going to be gone through.
"We think this is rotten timing of the part of MSD (the Ministry of Social Development) to introduce the restructuring just when people are at peak workload like this."
Social Development Minister Paula Bennett would not comment on the cuts on Thursday, other than to say it is an operational matter.