P&O Ferries has sacked 800 seafaring staff with immediate effect, but some crew are defying orders and refusing to leave their ships in protest.
Workers are understood to have been told the news on a video call. The firm said the "tough decision" was made to secure the future of the business.
Union RMT said crewmembers were being replaced with foreign labour.
P&O Ferries said its services will not operate for the "next few days", with passengers told to use other companies.
The ferry operator said its survival was dependent on "making swift and significant changes now".
"In its current state, P&O Ferries is not a viable business. We have made a £100m loss year on year, which has been covered by our parent DP World. This is not sustainable. Without these changes there is no future for P&O Ferries."
Private security officers have been sent onto one ship docked at Larne Harbour in Northern Ireland, to remove staff on board, according to the RMT.
Gary Jackson, a fulltime officer onboard the Pride of Hull said crew docked in Hull were informed they had lost their jobs through a pre-recorded Zoom message at 11am and had not received anything in writing from the company.
"We've still not received any detail further on what they will offer. We can see from the ship two vans, one with agency staff and the other with what we believe are security staff to remove us...and that's why the captain here lifted the gangway".
East Hull Labour MP Karl Turner said "new foreign crew [are] waiting to board the Pride of Hull" while the current crew onboard have begun a "sit-in".
However, some contractors are stuck onboard the vessel and not allowed to leave.
Keith Davis, was on the Pride of Hull to fix a piece of kitchen equipment and said he and eight fellow contractors were now stuck on board after the captain lifted the gangway.
"We're being held against our will, I'm not trying to be dramatic, but we can't get off the ship," Mr Davis said.
The union said it has instructed members to stay on board their vessels once they have docked or risk being "locked out" of their jobs.
Darren Procter from the RMT said staff were given no warning.
"We were informed that there were coaches full of individuals looking to replace the staff with no consultation with the staff or unions. We've seen minibuses full of workers and security staff who have had handcuff training. This is how they plan to treat staff who show resistance."
I am very concerned about the news from P&O Ferries this morning and we will be speaking to the company today to understand the impact on workers and passengers. (1/2)— Rt Hon Grant Shapps MP (@grantshapps) March 17, 2022
The BBC is not responsible for the content of external sites.View original tweet on Twitter
Transport Secretary Grant Shapps tweeted that he was "concerned" about the news and would be speaking to the company today.
"Important to note other operators continue to run cross Channel routes, so passengers and goods can flow, but I am working with the Kent Resilience Forum to minimise disruption," he added.
P&O Ferries services scheduled for Monday include 14 between Dover and Calais, three between Liverpool and Dublin and seven between Larne in County Antrim and Cairnryan in Dumfries and Galloway.
The cross-Channel operator has said on Twitter that sailings between Dover and Calais scheduled for today will no longer run, and customers with tickets were instructed to sail with rival ferry company DFDS.
Earlier, DFDS director of capacity Chris Parker said his staff "were working to take some of the passengers in between Dover and Calais where we can, and we have the capacity to do so".
P&O Ferries is one of the UK's leading ferry companies, carrying more than 10 million passengers a year before the pandemic and about 15% of all freight cargo in and out of the UK.
However, like many transport operators it saw demand slump in the pandemic, forcing it to announce 1,110 job cuts. That came after it failed to secure a £150m bailout from the government.
In its statement on Thursday, P&O Ferries said: "In making this tough decision, we are securing the future viability of our business which employs an additional 2,200 people and supports billions in trade in and out of the UK.
"And we are ensuring that we can continue serving our customers in a way that they have demanded from us for many years."
A maritime executive has told the BBC that the entire ferry sector has been decimated by the Covid crisis.
They pointed to the fact that British and French seafarers are particularly expensive to employ compared to foreign staff.
Lauren Shaw and her husband told the BBC they were booked with P&O to travel on a ferry from Cairnryan to Larne at 16:00 this afternoon. "We had a phone call at 10am to tell us there would be no sailings today and that they hadn't been told a reason why," she said.
With no further information, the couple have started travelling to the port because they live four hours away - and are hoping for an update soon.
"They said that if we get to the port, they may be able to put us on Stena Line, but it's not guaranteed," Lauren added. "It's really frustrating."
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