Just a few comments:

1. Another business taking clients from you is not “stealing”, and they are not “your” clients.

2. Employees who are not doing a good job or who are not meeting your expectations should be let go. If you are not in a position to let them go it’s because you’ve failed as a business owner and manager.

3. If you have put your employers in the position of holding or winning clients you should be treating them a effectively partners since that’s a closer description of your relationship.

Check yourself and do the math.

What will you lose in productivity and hard costs to lose him, how long will it take, what’s the impact if you do lose him, what are the risks if you make a bad hire in the interim?

This is just a math problem.

For next time, fix the problem by having a clear pay, review, raise and bonus cycle that rewards tenure, productivity, performance and value.

Everyone in your company should know the financial benefits for exceeding expectations, what will happen if the do not meet expectations, and what will happen if they fail to meet expectations.

This opens you up to legal liability: if you have actual knowledge that the time record is incorrect it is not a defense that you followed the record. When you have knowledge of an incorrect entry, you must still pay correctly.

So for example if there is no out punch on Tuesday, you can’t pay nothing for Tuesday until the employee complains in writing.

Ultimately OP has an old system; he could either have employees review their time card before payroll, or manually review himself, but any punishment based on bad punches could easily lead to fines or turnover.

That said, it’s totally fine to let people go for tjme keeping problems.

Your situation is the case for the proactive management method where an employer/boss intervenes directly and forcefully in the personal life of an employee not because they are a good person but because it’s in your best interest.

It could be months or years to replace this person. That’s a big risk.

The other way to go with this in the future is to ensure that no single employee or resource is a roadblock to completing your mission. No one should hold you hostage.