Dear Kader,
Please keep the old file as a supplement and start with a new file, new employee number etc.. For the purpose of performance appraisal etc, you can refer to the earlier performances. This will help you in evaluating better.
Moreover, there are so many things which you'd have already done for the employee earlier.. like training, educating, workshops and he might have attended seminars etc, which again should not be duplicated, so it's always better to keep the old file as a reference/ supplement to the new file.
Regards,
Capt Deepak Moharana