Lenriak: Gear is a one time payment and the gear is dropped when a merc leaves. I've never hired any merc twice in a single playthrough so I'm guessing they don't have any gear to hire with the second time
With medical deposits, a merc has never left me before (deaths don't count :P) so I'm not exactly sure how it works so this is just a guess. Deposit is paid when hired and is returned in full if they leave uninjured, partially returned if they leave injured, and doesn't return if they die.
Kazper: 100% correct
Agreed. So if you're going to let someone go, try to heal them before they leave. Insurance will fully cover your costs though, so it's worth getting (unless you're one of those who reload every time someone kicks the bucket).
I think that if you didn't actually choose to buy the gear when you hired the merc the first time, then it might be available when you hire the merc the second time (but not for contract extensions since the merc is already in-country) - but I can't imagine you wanting their gear by that stage anyway since you'll have other sources available. So that's why I only think it as I've never tried, and I can't remember re-hiring someone after they'd left my employ either - the only merc I didn't renew the contract of was that guy who'd just been in rehab from MERC - if you've had him in your team before you'll know why I didn't renew it! BTW it's worth getting him at least once just for the laughs - it's amazing the amount of detail they put into this game).
With the 1.3 patch, you get a choice of a number of different combat gear loadouts, but once you choose one all of them become unavailable for any subsequent re-hiring.
