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Have a witness in the room unless you absolutely trust the employee you're firing.
Don't beat around the bush. You're here to fire the person, not talk about the Red Sox or the weather.
Speak about the firing as a done deal. Don't give the employee a false sense of hope that he might be able to change your mind and save his job.
Choose the right way to say it. “We've decided to let you go” or “It's time for us to go our separate ways” are better than the lawyerly “We're terminating your employment.”
Resist the temptation to get into a debate about the employee's performance or conduct. Now is not the time for that, and you'll just end up making the employee defensive.
Tell the truth and nothing but the truth, but not necessarily the whole truth. There's no need to go through every transgression the employee had. The less said, the better. Telling untruths, even white lies to soften the blow, is a risky proposition.