The decision to award a significant public contract to owner P&O Ferries sparked outrage after the company briefly laid off its 800 workers last year.
DP World has been approved to co-manage Freeport Thames in Essex as part of the Freeports Rishi Sunak plan.
The union congress said it was a “bad decision” that allowed other employers to “go with impunity.”
The government said the new free port would “contribute to economic growth.”
P&O Ferries is laying off hundreds of seafarers in March 2022 and replacing them with foreign agency workers who earn less than minimum wage.
The move sparked outrage and led to calls for P&O boss Peter Hebblethwaite to resign.
At the time, the government described the treatment of workers as “completely unacceptable”.
A week later, Hebblethwaite admitted before lawmakers that the decision violated labor laws.
Free ports aim to create economic activities near seaports or airports, such as trade, investment, and jobs.
Goods entering free ports are exempt from taxes, called duties, usually paid to the government.
Eight free ports have been established in England, and more are coming.
The government has confirmed that a new free port has recently been approved for the Thames Estuary area and will be operated by a partnership between DP World, automaker Ford, and Forth Ports.
Paul Novak, general secretary of TUC, said ministers should “exempt the company from all public procurement and trade relations” following the layoffs at P&O.
“But the government chose to reward DP World with another great offer. It gives the green light to other fraudulent employers to operate with impunity.”
A government spokesman said the new free port “will help grow the economy and raise standards by providing much-needed quality jobs and investment in the region.
“This agreement means Freeport will now receive up to £25 million from the Government and potentially hundreds of millions in local business fees.”
The spokesperson added that the funds would be provided to local authorities in the free zone and used “for the benefit of the whole area.”