The simple answer is, The sooner the better. Companies’ termination decisions should occur as soon as possible after management has completed its internal fact-finding investigation. Final termination decisions are necessary after a summary offense such as gross insubordination, theft, or fraud occurs or after a worker violates a final written warning in the progressive discipline process.

Your failure to terminate an employee very soon after the event may be interpreted by a court as an acceptance of the employee’s conduct. A plaintiff’s attorney may argue that you condoned the behavior by failing to act on it within a reasonable amount of time and that you should consequently be precluded from changing your mind at a later, more convenient date.

Since delay of more than a few days could imply an acceptance of the misconduct or substandard job performance, your subsequent discharge of the employee could be challenged. Remember that you can be held to have violated the implied promise of good faith and fair dealing if your decision to summarily discharge the worker appears to be just a pretext, capricious, or unrelated to business needs.

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On the other hand, it is sometimes difficult to conduct an investigation
and reach a conclusion within a day or two after a precipitatingevent. If you meet with an employee regarding a manager’s complaint and more witnesses will need to be polled and additional evidence will need to be gathered, place the employee on a paid investigatory leave. Tell the employee that the investigation may result in a termination. Inform the individual that you will call him at home with any questions that surface and keep him abreast of the pending investigation. Finally, let the person know that you will ask him to return to your office once a decision is made so that it can be discussed face-to-face.

Taken From : The Hiring and Firing Quention and Answer Book