The individual who needs to be fired, is almost begging to be fired, but is still around, often performs counter-productively just to see how much you'll take. However unpleasant the act of firing may be, as long as you put it off, you expend energy in a continuous test of wills. An about-to-be-fired employee is like a corpse lying in the hallway. Somehow, everyone in the office knows when one of their associates has become superfluous, and tiptoes around the cadaver. And the longer that body lies there for apparently no reason, taking calls and drinking coffee, the greater the impact on office morale. Get rid of such a person before it's obvious even to the temps you need to, but haven't.
But however you approach terminations, remember this rule: when you get rid of someone, never, ever give them.a hook with which to get back into your organization.
Make a clean, definable and irrevocable break. Separations at the management level can be very expensive for a company, especially where employment agreements are involved. But regardless of cost, sever the relationship surgically and completely.
Don't try and save money by offering such hooks as stock options to the person you're terminating. Any money you think you're saving will be peanuts compared to the expenses and aggravation which you inevitably incur later on.