John has it right. I'm basically a lurker here, but as an ex-manager in a large corporation, I have experience dealing with performance problems. (Got out of mgmt because I got tired of being a baby-sitter).
If you haven't made it crystal clear to your employee that his performance is not acceptable - with specific examples - you need to do so. Provide specific and measurable goals that must be met and maintained. Examples are work completed in acceptable timelines or work to acceptable quality standards. "Acceptable" is a subjective term, so you need to be clear about what acceptable is.
Make this a written warning and make it clear that failure to achieve and maintain the required standards of performance can result in termination. You really should have him sign the written warning. Such documents usually include a statement to the effect that "signature means that employee understands and acknowldges receipt of the document but does not necessarily agree with its contents" or similar. If you're at all concerned about a lawsuit post-termination, you need to CYA here. The point about "doesn't necessarily agree" means that all the guy is signing is acknowledgement of getting the document. If he refuses, note that on the document. BTW, both of you sign the document. You keep the original, give him a copy immediately.
It really sorta sucks to have to do this, but it protects you in the long run. It really doesn't take a whole lot of time to put together a 1-2 page document that spells out what the problem is, what the required performance is and what the potential result will be if the required level of performance is not attained and maintained.
It's important to focus on required results - not how hard someone works or personal problems they may have. You have a business to run. Focus on the performance you require from your employee(s) to run that business. The time you take to do this now will save you time and money in the long run.
FYI, in CT terminating someone doesn't necessarily mean they get unemployment. If you "lay them off", them they can get unemployment. If you "Discharge" them, they have a hearing and may very well not collect unemployment. Knowing that might motivate this guy a bit.
If the guy turns his performance around - let him know you see it. If he makes a brief improvement but returns to his old ways, he can either give him a final warning or can him.
