It's hard, but necessary, to terminate employees who commit misdeeds or who just aren't performing, because they keep everyone else from performing as well. But it's equally necessary to make sure that you approach each potential termination systematically and fairly, to stay out of legal danger and to establish a positive. Here are the steps to take:
Lay out the facts and the consequences. If you're ready to fire someone, you should be absolutely sure that the employee knows why. Meet with the employee in private, go over the rules and policies at issue, and provide your evidence that they've been broken. This applies whether you're talking about a flagrant act of misconduct (such as stealing) or an ongoing pattern of substandard performance.
Provide an opportunity to be heard. It's often advisable to not expect the employee to respond immediately to your charges. Set a separate time and place for the employee to present his or her case and for you to elaborate on yours. In union workplaces, the worker has a right to be joined at this interview by a union representative. You should also consider including a neutral third party, such as a fellow manager, to observe and record.
Weigh the consequences carefully. Again, you shouldn't decide immediately to terminate an employee, but you shouldn't wait a long time either. Even when a case appears clear-cut, it's important to take care if you approach the matter with care if you want to convince fellow employees, or a court, that your discipline isn't arbitrary or inconsistent.
Make a rational decision. In other words, the punishment should fit the transgression. It's not dependent on how valuable the employee is, or how bad the incident makes you or the enterprise look, or how serious the outcome of the misdeed was. Allowing such subjective factors to influence your decisions will cause more long-term damage than it resolves. It undercuts your attempts to create a culture of fairness, and it gives aggrieved employees extra ammunition in court.