This answer is unsatisfying, but: There are lots of different solutions to this problem, and they work for different people more or less well, but there is no (and in my opinion never will be) a single system that does this thing.

That said, let's look at the Twin Oaks labor system:
http://www.thefec.org/systems-and-structures/twin-oaks-labor...

From that document:
> "Twin Oaks’ labor system requires everybody to plan and record personal labor. This can be a trial, but the organization, accounting, equality, liberty, and flexibility that Twin Oakers enjoy depend substantially upon this minor clerical chore."

In other words, the Twin Oaks system is pretty exacting. You live at Twin Oaks. On Thursday (or whenever), you turn in a labor sheet saying what you intend to do the following week. Let's say you don't have a lot of responsibilities, so you're just saying that you want to help cook dinner on Tuesday afternoon and garden with your friend Shannon on Wednesday morning, but you don't really have other plans. This sheet goes to the labor assigner, who then schedules you for 42 hours of labor for the week and sends it back to you. Then you are responsible for doing what's on the sheet for that week.

If you don't do it, there's a series of consequences, meetings, and if you can't reach some agreed fair contributions, eventually your membership would be revoked.

The East Wind system is less regulated -- you don't need to schedule your activities a week and a half in advance, you can just decide what you want to do when you want to do it. However, you are responsible for writing it down, and working at least 35 hours/week. If you don't, consequences, meetings, eventual removal from the community.

Not all communities have labor accounting or labor sheets, and these systems do not work for everyone, but it seems virtually unavoidable in larger communities where peoples' contributions can become invisible. It's true whether they're slacking way off or if they're working themselves into burnout.

In communities without labor accounting, it's easier in one sense -- you don't have to remember to write shit down and keep track of what time it is, which is nice. It's also most common in communities that are small enough that virtually everyone conferences together daily around the breakfast/lunch/dinner table, and so it's informally easy to distribute responsibilities (e.g., "I've been really busy splitting and hauling firewood all day, but I noticed that the hose spigot in the garden is leaking again. Does anyone have time today to go look at it and figure out what to do?")

As a community gets larger, it becomes harder to see who's overloaded and take that off of them, and it becomes harder for them to distribute work to others. You'd think it would be easier (there's more people!) but in my experience, as a community gets larger, responsibility gets diffused. Somebody Else's Problem Fields pop up on all kinds of projects that people have any reason to believe someone else is going to handle without them having to do anything.

However... this doesn't seem totally true. Kommune Niederkaufugen in Germany, for example, has no required labor system but has 70 members. Each member is part of two different groups: a labor area, and a living group. My poorly-informed opinion is that this system works for them because members get support and create organizational structure within those smaller groups.

& there are always freeloaders. They can lie on their labor sheets, they can take half their time in breaks, they can take credit for others' work, whatever, any system has a method where people can be disingenuous about their labor contribution. There's also different levels at which people are capable of contributing, both as physical ability and psychological motivation and willingness. Members of communities with collectivized labor need to recognize that sometimes they will be the ones who are capable of "doing more", and sometimes they will not "pull their own weight."

Your example conflates a couple different factors:

> "if someone is just lazy and does the bare minimum and the quality of the their work is always pretty low, but otherwise they are a great person and a lot of fun to be around - how do you handle that type of situation?"

... make your minimum work requirement is something that everyone feels comfortable with actually being a minimum work requirement, reducing the feeling of nervousness and being judged by an unknown standard on behalf of everyone in the community
... allow the workers in an area to set their own standards and for them to give feedback and enforce them among each other, and to ultimately remove people from their work area if they can't improve output based on feedback
... recognize the value of labor contributions outside of business and domestic labor, such as cultivating a social setting that people enjoy living in, casual mediation that reduces tensions between people and groups, and encouraging healthy behavioral outlets for members of the community

for that last bit, I want to point out that you don't need to keep track of those hours in number -- it would be kind of hard -- but simply recognize that if you increase the number of hours that people need to spend working in the business and the kitchen, then you are reducing the number of hours that they have available to do the work that, honestly, is really why you want to live in community with a bunch of people, and that's why you set your minimum labor quota the way that you do.