The answer to this one depends on why the employee is unlikely ever to be able to work again.
You can legitimately dismiss an employee who is unable to do his job because of sickness - provided that you have followed a fair procedure before doing so. This involves consulting with the employee, obtaining up-to-date medical evidence as to the prognosis, and considering whether alternative work could be offered. As the Court of Appeal has confirmed, you can dismiss even if the employee's sickness is down to you (for example, if he has been incapacitated as a result of stress at work). Under such circumstances, the Court said, the employer would be expected to 'go the extra mile' in finding alternative employment; but if that failed, the question of culpability would be 'relevant' but not 'decisive' in determining whether dismissal was reasonable. (However, the employee would have grounds for suing you for damages.)
If, however, your employee is suffering from a disability (as defined in the Disability Discrimination Act 1995 - see Discrimination), then you are obliged to consider whether 'reasonable adjustments' could help him return to work, before you make any decision on whether to dismiss. The definition of disability has been extended to include long-term conditions such as HIV-Aids, multiple sclerosis, cancer and additional forms of mental illness, including for instance recurring depression. A tribunal decision has also defined dyslexia as a disability.
If you fail to consider 'reasonable adjustments' under these circumstances, dismissal might well be discriminatory, as well as unfair.
On the other hand, the Employment Appeals Tribunal has recently ruled that you can treat employees who are absent from work because of disability the same way as you would treat employees who are sick - so if you have your own sick pay scheme, and would cut back on payments, say, after three months' absence because of sickness, you can do the same after three months' absence because of disability. You cannot cut back on payments under the SSP.
Overall, termination may be lawful, but only if you have followed fair and reasonable procedures. These procedures must be equivalent to (or better than) the minimum procedures which were brought in by law in 2004 (See Discipline and Grievance).
