The crisis engulfing P&O Ferries deepened on Friday after UK authorities launched a criminal investigation into its sacking of nearly 800 UK-based sailors with no notice last month.
The UK’s Insolvency Service said it had “commenced formal criminal and civil investigations” into the sackings, which have turned into a reputational disaster for P&O following heavy criticism by unions and politicians.
Dean Beale, chief executive of the Insolvency Service, wrote to business secretary Kwasi Kwarteng to confirm the move following “an urgent and thorough enquiry into the circumstances surrounding the redundancies”.
The business secretary called in the Insolvency Service two weeks ago in response to the sackings, which he said “appeared to have failed to follow” the proper process for notifying both the government and trade unions.
Failure to inform the authorities is a criminal offence and could lead to an unlimited fine for the company or its directors, Kwarteng warned.
But lawyers have said it is not clear whether these penalties apply to the maritime sector, where the employer’s obligation is to notify authorities in the countries where its ships are registered. P&O ships are registered outside the UK.
Shapps has separately written to the Insolvency Service, asking the body to consider the disqualification of P&O Ferries chief executive Peter Hebblethwaite, who he believes is “unfit to lead a British company”.
Hebblethwaite has already admitted the company broke the law by failing to properly consult with unions, a civil law issue, and paid staff off with enhanced redundancy packages to compensate.
Most director disqualifications relate to cases where a company has already gone insolvent but the Insolvency Service has the power to conduct civil and criminal proceedings against people who have acted improperly during the life of a company or during an insolvency process.
The service said that in cases of wrongdoing it had the power to petition the courts for the company to be wound up or take action to disqualify the directors.
The threat of criminal proceedings piles new pressure on P&O just as the government appeared to be running out of options to force the company to back down.
Alan Bogg, professor of labour law at Bristol University, said the Insolvency Service’s intervention was “quite a surprising announcement” that keeps the legal pressure on P&O “alive”.
“If it does appear that P&O failed to provide the requisite notice to the secretary of state, then not only could the company face an unlimited fine, but so too could its directors,” said David Fendt, senior associate in the insolvency team at law firm Russell-Cooke.
The company has rebuffed a government call to re-employ the sacked workers, which it has said would “deliberately cause the company’s collapse” and endanger a further 2,200 jobs.
The ferry company has argued that it had no option but to completely remodel its crewing structure and replace its former employees with cheaper agency staff who will be paid an average of £5.50 an hour. This is well below the UK’s national minimum wage but legal because the crew work offshore.
Shapps unveiled plans this week to force ferry companies to pay the minimum wage by handing ports the power to refuse entry to ships. But the ports industry immediately criticised the idea, saying it should not be expected to “police” employment law.
P&O has indicated it is willing to pay the minimum wage if its rivals are also made to do so.
In a statement on Friday, Shapps said: “I have called for the P&O chief executive to step down after he shamelessly told parliament he had knowingly broken the law, and it is right the company is held to account for its actions.”
Kwarteng said he would “follow this matter closely as the investigations progress”.
P&O declined to comment.