Tory ministers have been accused of "endorsing the thuggish fire and rehire tactics of P&O", after a memo revealed officials had been briefed about the firm's plan to sack workers in advance.
The shipping giant which operates four routes including Liverpool to Dublin, announced the mass dismissal of 800 staff last week - blaming £100 million losses caused by the pandemic.
The RMT union has claimed P&O vessels are now set to be crewed with Filipino workers on contracts paying below the minimum wage.
Read more: Safety fears as P&O Liverpool ferry resumes with agency staff
Shadow Transport Secretary Louise Haigh said the move was a "scandal" as she tabled a motion to urgently strengthen workers' rights.
Ms Haigh said: “The Government must start by immediately commencing criminal action against P&O Ferries for their flagrant breach of employment law.
"It should mean unlimited fines not only for the company but for directors and managers or any of those who are complicit."
Ms Haigh went on to reveal she had been leaked a memo, apparently circulated in Government last week, which showed transport officials were aware of P&O Ferries’ “game plan” to sack staff before workers were told.
She said: “This memo was no vague outline, it was the game plan of P&O and I can reveal it not only makes clear that the Government was made aware that 800 seafarers were to be sacked, it explicitly endorses the thuggish fire and rehire tactics that P&O had clearly discussed with the department ahead of Thursday.
“There is no indication, nothing in this memo at all that expresses any concern, any opposition, raises any alarm about the sacking of 800 loyal British workers.
“This is the clearest proof that the Government’s first instinct was to do absolutely nothing.”
Transport Secretary Grant Shapps said he had not seen such a memo and said no action was taken by his department as there was an "expectation" the firm would follow proper redundancy procedure.
Mr Shapps said the Government would be reviewing its contracts with P&O and that he had asked the firm to rename their ships from "Spirit Of Britain, Pride Of Canterbury and Pride Of Hull".
But on fire and rehire Mr Shapps was noncommittal, telling MPs: “I’ve asked the Business Secretary to produce additional information and guidance to employees, and if we need to go further then this is something we will consider doing.”
Former shadow chancellor and Liverpool born MP John McDonnell, responding to Mr Shapps' comments, said: "Nothing I've heard from the Secretary of State gives me reassurance that either the jobs will be reinstated or that there will be legislation brought forward to prevent this happening to other workers.
"I worry that the anger expressed today will deflate and what will happen is those workers will be forgotten about over the coming weeks."
Labour's motion, on which the Tories abstained, passed by 211 votes - but without Government support is unlikely to lead to any meaningful change in the law.
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