They can be sunk, but it's a waste of time and ammo.
In real life in any war there are going to be atrocities, and propaganda about enemy atrocities that are just made up. "If you surrender, the enemy will kill you with a flamethrower!!!" Get the troops to believe that, they'll be more likely to fight to the death instead of giving up.
There were verified cases of U-boats machine gunning survivors in the water, other verified cases where the sub gave the survivors food, water, a compass, and the course to the nearest land.
One famous/infamous case for American subs was USS Wahoo, some accounts you read claim the Captain (Mush Morton) hated the Japanese so much he machine gunned survivors in a rage. The actual official report says he sunk a troop transport, went in to see if he could get a prisoner or two, and the troops in lifeboats and landing craft opened fire on the Wahoo with machine guns so he had no choice but to return fire.
Humanitarian reasons aside, there are more reasons not to do it than to do it. Atrocities more often than not will stiffen resistance and piss off the enemy, if you're looking to break their spirit and reduce their morale that will usually have the opposite effect. It's also a two way street, you give the enemy all the excuse he needs to be barbaric in return. Risk versus reward is also a big factor, the ship you sunk is expensive and not easy to replace, a few dozen merchant seamen and a couple of rafts and lifeboats are cheap and easy to replace. One of them shoots back and kills a second class gunner's mate with a lucky shot, you just lost that contest because it takes years of training and a lot of money to make a qualified submariner. Just not worth the risk, once the ship goes down beat feet out of the area.
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