The Insolvency Service has determined that P&O Ferries will not face criminal proceedings over its actions in sacking almost 800 workers earlier this year.
The company drew public ire and was dragged before MPs to answer questions when it sacked hundreds of workers without warning in March.
Business Secretary Kwasi Kwarteng called on the Insolvency Service to investigate whether any wrongdoing had been committed.
In a statement, the government agency said it had determined there was “no realistic prospect of a conviction.”
A spokesman said: “Following a full and robust criminal investigation into the circumstances surrounding the employees who were dismissed by P&O Ferries, we have concluded that we will not be taking criminal proceedings.”
A civil investigation is ongoing.
Nautilus International, a union representing maritime professionals, said the Insolvency Service’s decision would be a blow to “discarded” workers.
General secretary Mark Dickinson said: “This is a deeply disappointing decision and the 786 seafarers and their families who were so cruelly rejected by P&O Ferries will be met with frustration and anger.
“Just one day after P&O Ferries’ parent company announced record profits, calling into question the company’s claims about operational sustainability, a system that fails to punish apparent criminal corporatism is letting us down.
“The message is clear, P&O Ferries must be held fully accountable for their disgraceful actions and we will continue to campaign to ensure that the CEO and his fellow directors are held to account and ensure that this never happens again month”.
During the hearings in Parliament the employer admitted that he had broken the law that would have forced them to give notice of layoffs. That was because no union would have accepted his new proposals, the bosses said at the time.
The chairman of the Commons Transport Committee, Huw Merriman, called on the Government to legislate to prevent a repeat of the scandal.
The Tory MP told BBC Radio 4’s Today programme: “The law is not strong enough and as MPs we need to legislate to make sure it is.
“I still maintain that their (P&O’s) actions are a disgrace, but shame on Parliament if we don’t fix it and prevent it from happening again.”
Labor accused the government of breaking its promise to hold P&O to account and warned of a repeat of the mass redundancies.
Shadow employment rights minister Justin Madders said: “For all the Tory ministers, they have broken the promises they made after P&O’s scandalous behavior and instead changed the law to open up the it leads for others to follow in its footsteps elsewhere.
“This result is a sign of a broken economy under the Tories and the fundamental weakness of employment protections under their government.”
A government spokesman told the BBC: “By sacking 800 dedicated staff, P&O Ferries has not only acted callously, it has failed to uphold the high standards we expect from British companies.
“Given their appalling behaviour, it is very disappointing that the company is not facing criminal proceedings.”