The government intends to sack former Royal Hobart Hospital boss Jane Holden by the end of the week.
She has been given 48 hours to plead her case, before her position is formally terminated.
Health Minister Michael Ferguson advised Parliament of the decision a short time ago.
She will be entitled to a 24-week taxpayer funded payout plus five week's in lieu of notice.
Earlier this month, the southern Tasmanian Health Organisation governing council told the government Ms Holden was not fit to run the hospital due to concerns about her performance.
Yesterday Mr Ferguson noted this advice was not based on the explosive findings of an Integrity Commission report into Ms Holden and her colleague in the North West Gavin Austin.
The pair were allegedly found to have used their positions to award work to the family members and associates.
Mr Austin has been officially suspended from his role as THO- North West pending further investigations into the nepotism allegations.