The decision made by P&O Ferries to sack 800 workers without notice appears to have broken UK employment law, the prime minister has said. If found guilty, the firm could face fines "running into millions of pounds", Boris Johnson told the House of Commons. Addressing the commons, Mr Johnson said:

"Under section 194 of the Trades Union and Labour Relations Act of 1992, it looks to me as though the company concerned has broken the law. And we will be taking action therefore, and we will be encouraging workers themselves to take action under the 1996 Employment Rights Act."

Under the law, employees must be correctly consulted – either through their elected employee or Trade Union representatives (where 20 or more roles may be made redundant) or individually (where fewer than 20 roles are affected). Selection for redundancy should be made against a set of fair and objective criteria. Alternative employment should be offered if relevant, and employees should be asked to volunteer for redundancy wherever possible.

The Prime Minister’s statement came as P&O Ferries announced it is offering more than £36m in compensation to sacked staff, with 40 employees in line for payments of more than £100,000. Payouts would be linked to the period of service, and in some cases exceed £170,000. The total value of the settlement is £36,541,648, with no worker set to receive less than £15,000.

A spokesman for P&O Ferries said:

“This has been an incredibly tough decision for the business: to make this choice or face taking the company into administration. This would have meant the loss of 3,000 jobs and the end of P&O Ferries. In making this hard choice, we have guaranteed the future viability of P&O Ferries, avoided large-scale and lengthy disruption, and secured Britain’s trading capacity.”

The company said that, subject to the settlement agreement, it would pay 2.5 weeks’ uncapped salary for each year employed, rather than the statutory one or 1.5 weeks. It is also offering 13 weeks’ salary in lieu of notice, and 13 weeks’ salary on top of this in absence of consultation. P&O Ferries said the settlement is believed to be the largest compensation package in the British marine sector.

But Maritime Union RMT General Secretary Mick Lynch responded angrily to the claim, saying:

"The details of what the company are imposing is not new. The 2.5 weeks is what we have negotiated in the past with P&O. The pay in lieu of notice is not compensation, it is just a payment staff are contractually entitled to as there was no notice given. The way that the package has been structured is pure blackmail and threats – that if staff do not sign up and give away their jobs and their legal right to take the company to an Employment Tribunal they will receive a fraction of the amount put to them.

"The actions of P&O demonstrate the weakness of employment law and protections in the UK. P&O have flagrantly breached the law and abandoned any standards of workplace decency. They have ripped away the jobs, careers and pensions of our members and thrown the 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. This is totally unacceptable and RMT will continue to campaign for our members to be reinstated at P&O and for better employment laws to protect all British workers.‎"