LONDON (AP) — The British government said Wednesday that a Dubai government-owned ferry operator at the center of a bitter U.K. labor dispute likely broke the law when it fired 786 crew members without notice to replace them with cheaper contract staff.

Prime Minister Boris Johnson condemned the “callous” behavior of P&O Ferries and said the company appeared to have broken British labor laws.

“We will be taking action,” Johnson said, adding that the company could “face fines running into millions of pounds” if it is found guilty.

P&O Ferries, which operates in Britain and is owned by a subsidiary of Dubai company DP World, claimed the move was legal because the staff worked on ships registered outside the U.K. The ferry operator acknowledged that the way the dismissals were carried out caused distress for workers and said it had offered “generous compensation” to those involved.

But the company also said it couldn’t have survived without “fundamentally changed crewing arrangements” and that it took the action to save 2,200 other jobs. The dismissed seafarers are being replaced by cheaper workers employed by a third-party crew provider.

The staff cuts — which came after P&O received millions in British government aid during the COVID-19 pandemic — have caused outrage and sparked protests by trade unions at U.K. ports. P&O canceled all its ferry crossings between Britain, Ireland and continental Europe after the announcement last week, disrupting the movement of both travelers and goods.

Trade unions have long objected to “fire and rehire” policies that let companies fire staff members and reemploy them on worse terms. Under British labor laws, such extreme action is only meant to be done after extensive employee consultations.

P&O chief executive Peter Hebblethwaite said that “restructuring our workforce in this way was not a course of action that we ever wanted to take.”

“We did this as a last resort and only after full consideration of all other options,” he said in a letter to the government.

The letter came in response to Business Secretary Kwasi Kwarteng’s request for information amid outrage from workers and allegations that P&O violated U.K. labor laws. Kwarteng last week said it appeared the company hadn’t followed the required process for dismissing large numbers of workers and notified it that failure to do so was a criminal offense that could lead to an unlimited fine.

The National Union of Rail, Maritime and Transport Workers reacted angrily to the P&O letter, saying the “disgusting statement” sought to justify the company’s “shameful acts.”

The ferry operator, a unit of Dubai-government owned logistics giant DP World, said the dismissed crew members worked on eight ships registered in the Bahamas, Bermuda and Cyprus. They were employed by three P&O units incorporated in Jersey, a self-governing crown dependency that isn’t part of the U.K.

Crew members employed by two other subsidiaries based in France and the Netherlands weren’t fired, P&O said.

P&O gave advance notice of the firings to authorities in the countries where the ships are registered, Hebblethwaite said. As a result, P&O doesn’t believe it violated U.K. laws.

P&O has announced that it will pay workers 13 weeks salary to compensate for the lack of advance notice, and another 13 weeks salary in lieu of consultation. In addition, P&O says dismissed crew members will receive 2½ weeks salary for every year of service, instead of the legally required 1½ weeks.

About 575 of the dismissed workers have accepted the severance package, P&O said.

But the RMT union said the package amounted to “blackmail and threats” because workers will only receive a fraction of the payout unless they give up their legal right to file an action with the employment tribunal.

“They have ripped away the jobs, careers and pensions of our members and thrown them on the dole with the threat that if they do not sign up and give away their rights they will lose many thousands of pounds in payments,” General Secretary Mick Lynch said in a statement.

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Jill Lawless contributed to this story.

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