P&O Ferries was tonight warned it could face “criminal” proceedings and an unlimited fine in an excoriating letter from the Business Secretary.
Kwasi Kwarteng said the firm had "lost the trust of the public and has given business a bad name”.
The letter, also signed by business minister Paul Scully, said the way staff have been treated "has been appalling".
But in a humiliating blunder, the letter was initially addressed to Robert Woods - who Sky News reported resigned as chairman in December. The letter was then deleted and replaced with one to chief executive Peter Hebblethwaite.
Transport Secretary Grant Shapps also wrote a separate letter to the wrong man.
Louise Haigh, Shadow Transport Secretary, said: “The Conservative government is a sinking ship. 48-hours after finding out that 800 British workers would lose their jobs, the Transport Secretary can’t even figure out the correct person to write to, to protect these workers.
“They deserve better. They deserve a Labour government who will act before the horse has bolted - by ending fire and rehire, and giving them security and respect.”
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.
Asked by the Mirror if it broke the law, P&O today insisted it followed “standard industry practice” by offering “enhanced severance terms” to those affected and “properly compensating them for the lack of warning and consultation.”.
The Business Secretary’s letter stopped short of saying the company would have to pay back £10m of furlough cash it received during Covid.
But it warned: “It is particularly depressing that this should happen given the millions of pounds of British taxpayer support P&O companies received from the furlough scheme.
"It cannot be right that the company feels tied closely enough to the UK to receive significant amounts of taxpayer money but does not appear willing to abide by the rules that we have put in place to protect British workers.”
Firms must by law notify the Insolvency Service - and consult with staff - if they plan to make more than 20 staff redundant at one site.
If there are 20 to 99 redundancies at a site, this must be at least 30 days before the first dismissal. If there are 100 or more, it’s 45 days.
A union source told the Mirror union officials are "99% sure" the action was unlawful, in their opinion, and are looking into the situation.
Chris Deeley of JMW Solicitors said P&O’s actions “seem to be flagrant breaches of employment law” which would trigger “incredibly expensive” enhanced severance packages.
The blistering letter said: “Failure to meet the notification obligation is a criminal offence and can lead to an unlimited fine.
“We note that in this case P&O Ferries appears to have failed to follow this process.
“We have therefore asked the Insolvency Service to look at the notification requirements and to consider if further action is appropriate.
“In the meantime, we would like to understand why you think these rules do not apply to you.”
The letter demanded answers to a series of questions about what had happened, and said the Insolvency Service would look at whether rules around the processes that employers must follow if they are making large groups of staff redundant had been followed.
Protests have been held across the country against P&O Ferries after its "appalling" decision to sack 800 seafarers as the company issued a fresh defence of its decision.
Demonstrations were held at ports in Dover, Liverpool, Hull and Larne in Northern Ireland and outside the London head office of owners DP World amid growing anger at the sudden sacking of staff with no notice.
Attempts are being made to replace them with cheaper agency workers, but the company is facing a backlash, including calls for a boycott of its services.
Shadow transport secretary Louise Haigh, who joined the rally in Dover, described P&O's actions as "nothing short of a national scandal".
"This is a disgraceful way for a Dubai-based conglomerate to treat British workers in this country," she told the PA news agency.
She added: "I will be taking action in Parliament next week to push the Government to take sanctions against P&O now, to push leverage on them, to force them to change course and if it's not illegal... then we need to make sure it is immediately made so."
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."
