OK, its a done deal now, but I'd appreciate your feedback regardless...sorry this is a bit long:
Background: I have 3 dcs: DS 5. DD1 nearly 3, DD2 5 months
We had our nanny for 4.5 years: she looked after DS1 full-time from 8 months; took a break during the second part of my maternity leave with DD1 then came back 4 days a week when DD1 was 9 months. When I was pregnant with DD2 we agreed she would work full time until DD2 was 3 months and DD1 started nursery, then reduced hours until Christmas and would probably stop around then.
Although our nanny was great with the dcs - she clearly loved them and they loved her - she is a challenging person with some 'issues', particularly with anger management and emotional maturity. These have caused some problems during her time with us, but on the whole we've let a lot of things go. In particular, we were aware (from a lot of people) that she didn't have a good word to say about us behind our backs - in particular, she was vile about me.
Recently she has been pretty unpleasant to my face, too. I liked being told when DD2 was 10 days old that "there's no reason for you to be tired, all you do is sit around on your arse feeding the baby" 
....and I had just made her lunch! She has always been slightly over-involved with DS1 in particular, calling him "her boyfriend" and "the love of her life", but I put that down to being very loving....
Aaaanyway....
We gave her formal notice at the end of last week that we didn't have a job for her from January. She's known it for a while, but we wanted to confirm. She begged us not to tell the DCs as "she couldn't cope with them knowing". We agreed that we would all tell them together during her last week.
I was aware that she was telling everyone at the school gates, as various mums had been in touch, but was fine with that, as long as me DCs didn't find out.
On Thursday DS's school called and asked me to come in for an urgent meeting. The meeting was with the Headmistress and his class teacher (Year 1) and both were very concerned. Apparently his behaviour had changed "alarmingly" since Monday, and although it was only 3 days, the change was so noticeable, and so out of character that they felt that had to call me in. This was the same child who had an overwhelmingly positive review at Parents Evening 2 weeks ago, so something was clearly very wrong. Amongst other things he had punched a Yr 4 girl in the playground on Wednesday for no reason and had been trying to kiss and cuddle a group of Yr 5 girls despite them asking him to stop.
His teacher had asked DS if anything was wrong, or if he had any secrets, but he had clammed up and looked terrified. He had told her that he has "no good thoughts" in his head, and couldn't sleep because he was worried :(
They asked if there were any changes going on - I explained the nanny was leaving (they knew....she had told both of them!) but that he didn't know. I started wondering....
On Thursday night I had a long chat with DS about hitting the girl (he said "I felt like I had to hit someone, so I did", but wouldn't tell me why he felt so sad), about how family are there to look after you, how you don't need to have secrets from mummy and daddy (even if someone tell you that you do) etc and then asked him if he had any secrets or if something was making him unhappy. He insisted not.
Then I told him that our nanny was going to be leaving in a few weeks.
He said "I know". I asked him how he knew. He told me that our nanny had told him on Monday but had told him that he absolutely mustn't tell Mummy or Daddy or his teacher that he knew, or he would get into really big trouble. He also told me that she had promised to phone him every morning and every evening, and write every day, and visit him and that when he was big he could go and stay with her. I asked him if this was why he had been so sad at school and he said it was because he wasn't allowed to tell anyone or talk about it.
[schock]
So in the space of 3 days, my happy, confident, school-loving, gentle DS was compltely changed by the weight of a secret he couldn't cope with. He was very relieved finally to be able to talk about it, and went to bed much happier.
Effectively, she tried to turn DS against his family and prioritised her emotional needs (wanting to be loved more than anyone else) over his.
She only briefly denied it when confronted by DH and myself - demanded that we "bring DS in here right now and have it out with him" - then claimed she had every right to tell whoever she wanted, then claimed we were only sacking her to get out of paying her. At which point I handed her a cheque for the full amount (including annual leave etc) and told her to get out.
So, WIBU to sack her when she turned up for work yesterday? I could cope with all her unpleasantness when directed at me, but always thought she would protect my children and never hurt them?