In order to make someone legitimately redundant, you have to base your selection criteria on objective factors. This doesn't have to be FIFO, but does have to be objective. Merely letting someone go because you think they are a poor performer, but haven't said anything to them about it (officially) won't be good enough absent any other factors. If e.g. all the other employees have lots of other qualifications and experience and your poor performer doesn't, then that could be a criteria. All other objective factors being equal though, mere "poor performance" that hasn't been followed up on won't be enough.
I'd recommend dealing with the poor performance issue directly. You say that it's difficult to pin down as he always "looks busy" but there are many ways to try and improve this person's performance. You should set measurable goals and targets and objectively measure him against his peers. If indeed he is performing poorly, then put him on a performance plan and follow the relevant procedures until improvement or dismissal. In such a small company, I'd imagine you are familiar with the requirements of everybody's job and it should be no problem to you to see/prove if this one employee is actually performing poorly. I think this is the most honest and fairest way to go. With a bit of extra work on your part, you will be able to handle this in a fair and legal manner.
The employee is perfectly entitled to be aware of his workers' rights.
Sprite