After the employee is terminated you might receive inquiries about the employee from other businesses. Be careful how you respond; otherwise you might find yourself in a defamation claim. The only way they can prove such a claim is to prove that you knew that the information you offered was false, but you passed it along anyway or that you were reckless in sorting out the facts.
You may take the most cautious approach and don’t tell them anything. You may limit your response to a confirmation that the employee worked for you and provide the dates the employee worked for you. You may provide the facts in good faith, but be careful when you do. As soon as you start getting into speculation or rumor, you’re in dangerous territory. If your motivation in providing the facts is to hurt the ex-employee or cover up the truth, you’re also in dangerous territory. It’s also tough to know how to word things when the employee has both positives and negatives. So the best policy is: if you’re going to give facts, only give them when you have good things to say; otherwise just provide the name, position, and term of the employee when there’s something negative.