I have a part time employee whom I am having to make redundant. She has worked for me for 7 complete years, and currently works 3 days a week. Her contract states that one month's notice either way is required to terminate employment, and also gives me the right to give payment in lieu of notice.

I am in some doubt as to the correct way to work out what she's due. Can you help? Can I give her one month's pay in lieu of notice, or do I have to give one week for every year of service? (This seems excessive to me, given that I already have to give 7 week's worth of redundancy pay as well.)

If I have to give one week's notice pay for each year of service, does this mean the official date for the end of employment is at the end of the seven weeks, or can it be from the date I gave the notice?

I'm confused by this as I would have thought having a contract covering all these items made things clear cut - but apparently not.

Any advice would be very much appreciated. I am of course seeking to do things properly and fairly, but in the current struggle to keep this small business afloat (hanging in there by a thin thread!) the rules seem extremely punitive for small employers. My house is up for grabs if the business fails and it really feels too stressful to bear sometimes...