UNION leaders have warned the company which has taken over ferry services to Orkney and Shetland that they could be on a collision course over terms and conditions for staff and potential job losses.

Serco, which takes over from the publicly owned NorthLink Ferries, won the £243 million six-year Northern Isles ferry contract in May and began operating the service yesterday.

Managing director, Stuart Garrett, who was in Aberdeen yesterday to meet passengers as he took up his new post, said: "Serco will offer a local service led by a locally based management team. The safety, quality and reliability of the service is my main motivation."

The RMT Union had already threatened to ballot members over pension rights, but Mike Hogg, the union's regional shipping organiser, said that issue had been settled.

"However there are other issues outstanding – zero hour contracts for seasonal staff waiting at home for a phone call to see how many hours they have to work that day; potential job losses; potentially tampering with the manning levels; and terms and conditions," he added.

He said that if the union didn't get assurances on these issues at a national meeting, it would issue ballot paper for industrial action.

A spokesman for Serco said the company had fulfilled all its obligation for the transfer of the near 400 staff, under the Tupe protection of employment regulations, and had been giving assurances to staff.