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The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers?
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Ben Horowitz's book "The Hard Thing About Hard Things" addresses lots of these problems and is definitely a great book to read when you are in a leadership position. His comment on firing people is make them understand why they underperformed and refer it to the expectations. Lead the conversation in a way so that they would actually fire themselves. And absolutely do it in a one-on-one meeting. In your case I would build on empathy and discuss everything with him and depart on good terms so he would of course also bring back the company equipment since it's not his (hopefully managed in your contract).
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