Maybe it was his poor performance that led you to make the difficult decision of firing him, but I hope he performed well during the interview process at another company, which is why they approached you for his referral check. I really appreciate your concern about the candidate's future, which led you to start this thread.
Feedback on Handling Reference Checks
Well, I would give you two types of feedback as I am not really clear about the situation:
It's not really clear whether the candidate or his relieving letter stated to the new company that he had been fired. If so, there is not much we can do. In that case, just say that the candidate was a trainee, and it was difficult for him to meet your expectations. Also, the project was in full swing, and you didn't have much time to train him, so you were forced to let him go; otherwise, he was really good.
If neither the candidate nor the relieving letter stated that he has been fired or terminated, then the situation favors the candidate. Usually, when a new employer requests a reference, they typically ask you to fill out a short form. All they usually ask for is the title and dates that the employee was employed. Just mention that the nature of separation was "Resigned" and the reason for leaving was "Personal reasons." Candidate performance during his tenure was "Satisfactory" (Please do say that keeping in view of the candidate's future). Will you re-hire him? "Yes, if he meets our current needs and requirements."
I have given the best advice I could in favor of the candidate. It would be great if our seniors could provide their feedback too, which could help us in future referral checks. Do let us know if you have any more doubts.
Regards,
Babu