First off, unless you intend to ask someone out on a date, you have no business asking them their sexual orientation. And since you shouldn't be asking your students out, you shouldn't take them outside the class and ask if they're gay.
Second, you shouldn't get into a verbal altercation with a student that would cause you to threaten him physically.
Third, you shouldn't offer to pay another student to kill the first student.
Of course, all of this is just alleged at this point. If it turns out to be true, then termination is not the only appropriate consequence.