P&O Ferries has made 800 of its staff redundant, effective immediately, and cancelled all its services for the next few days.
The move - to plug a £100m year-on-year black hole in the company's finances - is believed to affect everyone from captains to check-in staff, to engine room staff, loaders and cleaners.
Unions have called for mobilisation and branded the redundancies "a knife right through the heart of UK maritime".
Read more: Staff urged by union to protest against 'vicious' move to sack 800 workers without notice
The company said these staff will be served with "enhanced" severance packages, calling it a "necessary decision" to protect its remaining 2,200 staff.
It said the business is "not viable" in its current state.
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In a statement, the ferry operator said: "We have made a £100m loss year-on-year, which has been covered by our parent DP World. This is not sustainable. Our survival is dependent on making swift and significant changes now.
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"Without these changes, there is no future for P&O Ferries."
People in balaclavas 'taking British crew' off ships
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Following the announcement, Labour MP Diana Johnson said people in balaclavas had been seen "taking British crew" off of the ships.
Making a point of order in the House of Commons, the Kingston upon Hull North MP described P&O's actions as "shameful" and warned they will have a "major economic impact on places like the Humber".
She said the staff who have been made redundant were being replaced by agency staff in buses on the quayside.
RMT representative Gaz Jackson told Sky News that he had been aboard one of the vessels when the news broke.
He said officers were played one Zoom video and given the chance to join the new company that will carry on the service, while ratings were played a different Zoom video and not given the same opportunity.
RMT general secretary Mick Lynch confirmed he had been receiving reports of security guards at Dover seeking to board ships with handcuffs to remove crew.
He said the union is seeking "urgent legal action" and called for the government to "take action to stop what is fast turning into one of the most shameful acts in the history of British industrial relations".
"If this happens at P&O it can happen anywhere, and we are calling for mass trade union and wider public mobilisation and protest against the company," Mr Lynch added.
Union members advised to stay onboard
RMT national secretary Darren Procter said the move by P&O Ferries "puts a knife right through the heart of UK maritime".
Meanwhile, Nautilus International union's general secretary Mark Dickinson said the union believes it is "in our members' best interests to stay onboard" until further notice.
He added: "The news that P&O Ferries is sacking the crew across its entire UK fleet is a betrayal of British workers.
"It is nothing short of scandalous given that this Dubai owned company received millions of pounds of British taxpayers' money during the pandemic"
'Significant disruption' expected as long queues seen in Dover
Lorry queues have been building up around Dover following the suspension of services.
P&O warned there would be "significant disruption" across its ferries services over the next few days but said it was working to minimise impact on customers.
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Morgan Ryan told Sky News he arrived at Larne in Northern Ireland with his family for the 8am sailing to Cairnryan - having been up since 4am - when they noticed people being turned away.
"We got to the front of the queue and a P&O staff member informed us all services had been suspended."
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He said they were directed to Belfast and assured all bookings had been rearranged with another company.
"Of course, when we got there they had no knowledge of any arrangement and had not received any contact from P&O."
Having paid €420 (£360) for the original booking, the family had to pay an additional £320 for the replacement trip.
Government 'concerned' at suspension
Earlier on Thursday, Transport Secretary Grant Shapps said his officials will be having "urgent discussions" with P&O Ferries as he expressed concern at the suspension of sailings.
The company, which transports passengers and freight, is owned by Dubai-based logistics giant DP World and operates four routes: Dover to Calais; Hull to Rotterdam; Liverpool to Dublin; and Cairnryan, Scotland, to Larne, Northern Ireland.
Following the coronavirus outbreak, P&O Ferries warned in May 2020 that around 1,100 workers could lose their jobs as part of a plan to make the business "viable and sustainable".
Have you been affected by the redundancies or had your sailing cancelled? Email news@sky.uk
