You should first and foremost consult a lawyer specializing in labor law in your jurisdiction, firing people depending on your location can be easy or nigh-on impossible.<p>That said, I&#x27;d be very straight with this person, explain that you no longer wish to continue with them. If their contract will lapse within the next 6 months or so I wouldn&#x27;t do anything other than maybe just buying out their contract for a lump sum. Otherwise just wait it out and hire your new guy&#x2F;gal when you can afford it.<p>I&#x27;m not sure I like the &#x27;we could pay a lot less&#x27; bit since that seems to indicate your motive is more economical than tied to this persons performance.