Changing an Employee from Part-Time to Full-Time

We have decided we need to change an employee's position from part-time to full-time.  The current employee has been notified there position will be converting to full time and they have been offered this position.  The PT employee has declined taking this position.  Do I lay this employee off?  Do I notify the employee that they have resigned since their position is no longer available?  Do I need to give them notice of 2 weeks?  Do I proceed using my termination procedure?
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