The five are some of 308 regular force employees from across the Navy, Air Force and Army told yesterday they were being "released in order to rebalance the workforce".
The announcement was the first in a series of cuts intended to remove 1000 uniformed personnel and replace them with 500 civilian staff. A similar exercise is expected later in the year.
No soldiers serving overseas are affected.
The Defence Force says the jobs targeted do not need to be performed by a military person with military skills, training and experience, but unions have condemned the cuts as an outrageous abuse of power.
Uniformed personnel employed in the 308 positions - mainly drivers, instructors, photographers, logistics and administrative personnel - could apply for or be appointed to the new civilian positions, or take redundancy.
The Otago Daily Times understands at least one of three Dunedin-based regular force Navy jobs has gone, while three of the six regular force Army employees based in Dunedin have lost their military jobs.
The positions were mainly training positions. Details of the fifth job loss were not available yesterday.
Chief of Defence Force Lieutenant-general Rhys Jones said the move, signalled in last year's Defence white paper, was about reprioritising and reallocating expenditure within the force's budget, so it could operate more efficiently.
"To be an agile and responsive Defence Force we need to ensure we have the right people with the right skills in the right role.
"While those who registered their interest in applying for civilian positions will welcome the decision, this is a difficult day for the Defence Force. Our people remain the heart of our military capability."
Public Service Association national secretary Brenda Pilott said asking staff to reapply for jobs on the open market added insult to injury.
"Morale is at rock bottom in the public service and change management processes of this nature only make that worse," she said.
Council of Trade Unions president Helen Kelly said there had been special constitutional reasons why military staff were not covered by employment law and the restructuring was an outrageous abuse of power.
"It's fine for the Defence Force to restructure, but to then make these workers apply for their own jobs on the open market is simply orchestrating what would be an unfair dismissal in any other normal business, and these men and women deserve more respect than that."
Ms Kelly called on the Government to step in and demand the axed staff be given priority for the civilian positions.
Green Party defence spokesman Keith Locke said the force seemed to be treating the cuts as a "normal layoff situation" when the circumstances were quite different.
People who joined the force gave up their right to collectively bargain for wages and conditions, and committed themselves to stay for a fixed time, he said.
Defence Minister Wayne Mapp last week said the "civilianisation" process would allow the force to get "more work out of fewer people".
- Additional reporting by NZPA
