Anyone working in a supervisory/management position knows that one of the dreaded parts of that job is having to terminate employment. The interviewer wants to know that you are comfortable performing the difficult parts of management.
"Terminating employment is one of the dreaded parts of being a manager, but sometimes it just has to be done. Whenever I am faced with having to terminate employment, I like to look at the whole situation, what led up to this point, and make sure I have documentation ready before calling an employee in. I like to talk to the employee and go through the reasons a decision was made for termination, give the employee an opportunity to ask questions/give feedback, and have all appropriate paperwork signed."
"Being new to management, I have not yet had to terminate anyone's employment contract. I have to say, it is the one thing I do not look forward to. Nevertheless, when the time comes that I must, I believe I will be fair and as sympathetic as the situation allows."