The Portuguese newspaper said Wednesday the man, who has since been killed in a tractor accident, became the prime suspect through tracking of his cellphone, the British newspaper The Mirror reported. Tests allegedly showed he had been near the McCanns' holiday apartment when Madeleine vanished in 2007.
Portuguese police recently reopened their investigation after a task force with London's Metropolitan Police gave them a report with possible new leads. Correio da Manha said police are now conducting a search for Madeleine's body based on the assumption they have identified her kidnapper.
Police refused to confirm the Correio da Manha report, The Mirror said.
Madeleine disappeared May 3, 2007, nine days shy of her fourth birthday. She was sleeping with siblings in the family's lodgings at the resort in Praia da Luz while her parents ate dinner with friends at a restaurant in view of the apartment.
The fired employee has not been named. Correio da Manha said he lived in Lagos, a 15-minute drive from the resort, and died at the age of 40 in 2009.
While investigators questioned more than 100 employees immediately after Madeleine disappeared, his name did not come up because he had been fired.