Many thanks for your patience. To answer your specific queries:
Q1 - A phased return to work can often be a recommended way of integrating an employee back to work, especially if they are dealing with stress/depression where chucking them back right at the deep end is likely to aggravate their condition or adversely affect their prospects of return. Easing someone back into the workplace on a phased return and slowly increasing their tasks and responsibilities until they are ready to return to work as normal can be an effective way of managing the employee's issues. Whilst you are not legally bound to adhere to the doctor's recommendations on this matter, you would need to give them serious consideration and if challenged in the future you may have to justify why you did not consider a phased return to be a reasonable solution in the circumstances.
Q2 - There is certainly no set answer to this question and each situation will always depend on its own circumstances. A phased return to work means restricting the employee's normal duties on a temporary basis until the employee returns to full health. So how many days you expect them to work, what duties you give them, etc will depend on their condition, how they are currently coping, what they feel they can do and so on. Usually a phased return would mean the employee working fewer hours than usual or refraining from certain duties for a period, gradually building up to full capacity. You need to agree on these together with the employee, taking into account any recommendations made by their doctor.
Q3 - If you were to dismiss the employee then you would be relying on the potentially fair reason of 'capability'. Whether a capability dismissal is fair will depend on the particular circumstances and the procedure that was followed. The employer needs to show they had reasonable grounds to believe that the employee was incapable of performing their job and that nothing further could be done to assist them. In the end they need to show that dismissal was a reasonable decision to take. The courts have held that an important consideration is whether any reasonable employer would have waited longer in the circumstances before dismissing the employee.
When looking at the reasonableness of such a dismissal, the tribunal will usually look at the following elements:
Dismissal must always be viewed as a last resort by the employer. Only when it is obvious that the employee cannot continue in their job and that there was nothing else available for them to do would dismissal become a fair option.
It is also important to consider the additional rights someone would have if the condition that is affecting them amounts to a 'disability', which is likely to be the case here. As such you would have a duty to make reasonable adjustments if the employee is likely to be placed at a substantial disadvantage when compared to non-disabled employees.
Q4 - Again, there is no specific limit in law and it really depends on whether you have specific policies on work covering that, the needs of the business, how past similar issues have been dealt with, etc. Before you consider dismissal for sickness absence you would need to ideally start issuing them with formal warnings about their absences and eventually once they accrue they could potentially lead to dismissal but again you need to consider reasonable adjustments first and use dismissal as a last resource.
In terms of salary obligations, you need to adhere to any sick pay policy or the employee's contract. For example these may entitle them to full sick pay to a period of time and then to reduced pay or just SSP.
In situations where an employee has been in receipt of discretionary sick pay and the employer wishes to terminate such payments, it may be advisable to give at least a month's notice to the employee. Alternatively, the employer should consider reducing their pay gradually so that the employee does not simply go from full pay to reduced pay or no pay in a short period of time.
Similarly, if medical evidence shows that the employee may be able to return to work in the near future and they have only just lost their sick pay entitlement, it may be appropriate to continue paying the employee for the remainder of their absence. If there is no definitive return date, the employee has already received sick pay for some time and their entitlement has expired, the employer may be justified in terminating discretionary sick pay, subject to giving the employee some notice.
Please let me know if this has answered your original question or if you need me to clarify anything else for you in relation to this?