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Protect your business. Look at it logically from her point of view Earn £6 or £7 ph with you or earn hourly rate set by herself.Bet its not all being declared either.You will lose this person once they have found work to replace the 2 days she's working for you. I can't agree with accepting gracefully once you accept something it becomes the standard by which measure is taken.Do you have other staff what signals is this sending out to them. She is no longer your employee she is an competitor that changed the moment she placed adverts.Don't fluff around get rid of her.
Where are the sweeping statements. The employees has acquired skills, knoweldge etc obtained while working for Dawn. Do you honestly believe her loyalty lies with her employer. Get her out of your business it is not healthy
There should be a restrictive covenant in her contract. That should deal with employment side of things. Yes people gain skills and move on , yet this woman hasn't moved. She is still in situ and that poses an conflict of interest. So how would you deal with it Paolo, so far you have picked holes in my posts without offering any solutions to the original question.