Just been talking about this with a colleague.

Let the fucker walk.

Who the does he think he is giving a manager an ultimatum. If you back down on this then you are showing a weakness.

Tell him if that's the level of respect he is giving to you and the company then you're better off without him. Pay him to the end of the week and tell him to get to fuck.

That's what I'd do anyway.

Plenty more drivers where he came from.