The way P&O sacked 800 staff with the aim of replacing them with overseas agency staff was “illegal” and “one of the most shameful incidents in British industrial relations”, a trade union leader has told Sky News.

Frances O’Grady, head of the Trades Union Congress, also called for the P&O Ferries staff sacked via Zoom on Thursday to have their jobs reinstated.

She said they were given “no notice, no consultation with their union and sacked by a company that has treated them like dirt” after people were pictured wearing balaclavas with handcuffs on their belts to force staff off ferries.

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The RMT union, which represents many of the staff fired, claimed on Monday that many of the replacement seafarers have been hired from India on as little as around £1.80 an hour – well below the UK’s minimum wage.

Asked if she considered P&O’s actions illegal, Ms O’Grady told Sky News: “We do. And we also think it’s one of the most shameful incidents in British industrial relations.”

She added that P&O has been handed control of freeports “worth millions of pounds” and sits on the Department of Transport’s advisory board, which awards licences, tax allowances and tax handouts.

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“The government could suspend their licences and tell them unless they reinstate those workers, then they are not welcome in Britain,” she said.

“We need an employment bill that strengthens workers rights but also respects union rights.

“This was a company that did not consult with unions as they are required to do by law.

“The government has got to come down on them like a tonne of bricks and make it clear that no employer can get away with treating workers in this way.”

Business Minister Paul Scully earlier defended the government’s reaction to the P&O sackings, telling Sky News he knew nothing about it until the morning it happened.

He said Transport Secretary Grant Shapps was informed the night before the company was going to announce redundancies the following day.

“But not that there were going to be balaclava-wearing security guards,” he said.

Mr Scully said the government expected the situation to be the same as previous redundancies by ferry companies where they announce a consultation and “the notification that is required under law”.

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He called it an “absolutely egregious situation” and has written to P&O’s chief executive to get the exact details of what happened so they can work out what punishment is suitable.

Mr Scully added that it is made more difficult because P&O’s parent company is not flagged in the UK so what they have done could be “entirely legal”.

Shadow Business Secretary Jonathan Reynolds said he was “deeply unimpressed” with the government’s reaction and said he would have been “suspicious straight away” if P&O had told him they were making redundancies then the next day it happened.

“The priority should be saying this is unacceptable in this country,” he told Sky News.

“We will not have a race to the bottom with standards promised after Brexit.”

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