The Government is looking into whether P&O Ferries broke the law with a mass sacking of 800 workers over a video call.
Downing Street today warned of "ramifications" and warned it was "too early" to say whether the firm acted lawfully by replacing workers with agency staff.
Boris Johnson's official spokesman did not rule out terminating government contracts with P&O's owner DP World, revoking the special status of DP-owned Thames Freeport, or asking the firm to return furlough cash.
It came hours after minister James Heappey claimed the firm had made a “commercial decision” and it appeared the government could not stop it.
RMT union general secretary Mick Lynch claimed P&O Ferries had “flagrantly broken the law, deliberately”.
Today the PM’s official spokesman said: “We are looking very closely at the actions this company has taken to see whether they acted within the rules.
“Once we have concluded that, then we will decide what the ramifications are.
“There are lots of valid questions in relation to existing contracts etc.
"We are working through exactly the detail of what action the company took. Once we have have come to that conclusion, we will set out any further steps."
Firms are required by law to notify the Insolvency Service - and consult with staff - if they plan to make more than 20 staff redundant at a single site.
If there are 20 to 99 redundancies at a site, they must notify the Insolvency Service and start a consultation at least 30 days before the first dismissal.
If there are 100 or more redundancies at a site, they must notify the Insolvency Service and start a consultation at least 45 days in advance.
It's understood the government is looking at both whether workers were and should have been consulted; and whether the Insolvency Service was and should have been notified.
Asked if the firm had broken the law, Boris Johnson's official spokesman replied: “At this stage it’s too early to be definitive.
"We expect companies to treat employees fairly.
"It is only in extreme circumstances that employers need to make extreme decisions to secure the future of their business if all other avenues have failed, including negotiations between employer and employee.
"We don't believe this was the case for P&O staff.
"But we are looking into this very carefully. The actions this company took yesterday are deeply disappointing and will be causing deep upset amongst loyal staff."
It comes amid mounting outrage and pressure on Boris Johnson to step in. Labour has written to the Prime Minister demanding he “stands up for loyal workers in Britain”.
Shadow Transport Secretary Louise Haigh, who is visiting sacked staff at Dover, called on the PM to suspend contracts and licences of P&O Ferries’ owner DP World until the matter is resolved.
She also demanded the company’s removal from the UK Government’s Transport Advisory Group.
Meanwhile Boris Johnson faces demands to spell out exactly when he knew about the sackings.
Transport Minister Robert Courts said the government found out about the impending sackings on Wednesday evening.
Mr Lynch fumed: “He knew this last night and didn’t tell anyone.
“The Department For Transport knew this was happening and they knew they were going to break the law.”
P&O Ferries owner DP World is majority-owned by the Dubai Sovereign Wealth Fund and, therefore, ultimately by the Dubai Royal Family.
Last night a minister failed to say if Boris Johnson discussed the issue on a trip to the United Arab Emirates on Wednesday morning.
No10 today said only a tight circle of officials in the Department for Transport knew on Wednesday night, and could not say when the PM found out.
The PM's spokesman denied P&O was raised in his meeting with the Crown Prince of the UAE on Wednesday, though could not immediately confirm the issue did not come up at all, in any way during the trip.
Labour today demanded the Prime Minister answer whether “anyone” raised the issue on his trip to the UAE, of which Dubai is a part.
Shadow Transport Secretary Louise Haigh said: “This was a despicable assault on workers’ rights.
“But British seafarers do not need meaningless platitudes - they need action."
After the PM failed to get an agreement to ramp up oil production, she added: “Boris Johnson went to the UAE with a begging bowl, and as he returned eight hundred British workers were sacked without notice by one of their investment arms.
“The Government must now stand up for loyal workers in Britain being undermined by overseas billionaires.”
A spokesperson for P&O Ferries said: "We know that for our staff this redundancy came without warning or prior consultation, and we fully understand that this has caused distress for them and their families.
“We took this difficult decision as a last resort and only after full consideration of all other options but, ultimately, we concluded that the business wouldn’t survive without fundamentally changed crewing arrangements, which in turn would inevitably result in redundancies.
“We also took the view, in good faith, that reaching agreement on the way forward would be impossible and against this background, that the process itself would be highly disruptive, not just for the business but for UK trade and tourism.
“We have offered enhanced severance terms to those affected to properly and promptly compensate them for the lack of warning and consultation.
"The changes we've made bring us into line with standard industry practice."
