FERRY services connecting Orkney and Shetland to the mainland face disruption over the festive period after the Rail, Maritime and Transport (RMT) union said it would hold a strike ballot over job cuts and new flexible working contracts.

Serco, which took over the Northern Isles service from state-owned David MacBrayne in July, is planning to axe up to 36 posts and introduce "flexible crewing levels" that can be adjusted in line with passenger numbers. But it was accused by the RMT of reneging on a previous agreement and putting profits ahead of working conditions.

The result of the ballot is expected in early December, allowing a strike to take place between late December and January with a "devastating" effect on services, the RMT said.

If a vote for industrial action is approved, strikes are likely to affect hundreds of passengers travelling between Aberdeen, Kirkwall and Lerwick and on a separate service between Scrabster and Stromness.

Serco – an international services firm that runs a wide range of government contracts covering prisons, schools, railways and hospitals – survived a legal challenge after winning a £40 million contract to operate the Northern Isles ferries for at least six years in May and saw off a previous threat of industrial action by the RMT over cuts to pensions.

The company had expressed interest in bidding for the CalMac network of lifeline ferry routes off the west coast of Scotland, but a competition for that contract was delayed by three years by the Scottish Government in September. Serco announced the Northern Isles job cuts a month later.

Bob Crow, general secretary of the RMT, said: "Serco are fully aware we will not accept attacks on our members' jobs and conditions, and what is now an all-out attempt to bulldoze through compulsory redundancies, cuts to core staffing numbers and the casualisation of these skilled shipping grades.

"We have no option now but to ballot in the face of this deliberately provocative action and the threat to our members' future livelihoods. We intend to conclude our ballot in time for Christmas."

Serco said it was hoping to achieve the reduction in its workforce through voluntary redundancies but has not ruled out compulsory redundancies. Stuart Garrett, managing director at Serco NorthLink, said: "We are disappointed with the RMT's decision to ballot and will work closely with staff and unions to avoid industrial action.

"As announced two weeks ago, Serco NorthLink is in the process of consulting with all seafaring staff and unions with a view to reducing staffing levels to allow us to tailor crew numbers to passenger numbers.

"Consultation with staff will look at all available options and we are hoping to achieve these changes through voluntary redundancies. Safety will not be compromised by our decision to adopt flexible crewing levels."

A Transport Scotland spokesman said: "While this is a matter between the employer and the union, we are disappointed at the decision to ballot for strike action while negotiations are ongoing.

"Serco NorthLink has advised that the current consultation exercise will look at all available options. We would encourage the RMT and their members to engage fully with Serco NorthLink to find a resolution to this dispute."