Assuming you have all of the documentation for the performance issues you've outlined, it is better to make the hard decision to terminate now rather than waiting for him to return. If you have the ability, you might offer to connect him with an outplacement firm to ease his transition. If you don't have documentation of the performance issues, however, you run the risk of increasing your company's liability exposure. If that is the case, I would suggest placing him on some sort of formal performance improvement plan upon his return, documenting specifically the areas where you need to see improvement and a reasonable timeframe (90 days) within which you need to see the improvement, and establish some regular check-ins. Happy to discuss further if that would be helpful.