The mental health team need to take a few courses in employment law - or stop giving people shit advice! Dismissing somebody on capability, with or without a disability, because they cannot do their job, is perfectly legal.
Nobody can tell you what this particular employer would do. One critical test in law is whether any contractual sick pay has been exhausted - that is company sick pay, and would include any payments made to top up wages on a phased return. Basically, if there is a contractual right to sick pay, an employer can begin the process to dismiss, but should not actually dismiss until (at least) that entitlement has been exhausted. If company sick pay is discretionary, or it is SSP only, this condition does not apply.
Being honest, I would be surprised if any employer was willing to allow this situation to continue / to lapse into another period of sick leave for the same reason, even if some or all of that leave was unpaid. I'm afraid I'd have to say that my own employer would definitely have started the process to dismiss by now, and they are far from being unsympathetic.
In terms of his personal position, were he to resign then it would not impact on benefits (as some people have suggested). The DWP are not quite that heartless, and resignation for good reasons - like being too ill to do the job / return to the job - is accepted. That said, he would be in a better position to allow a dismissal to take place - if they are happy to continue paying him, then he may as well take the pay until they are not happy!
Given the length of time that he has been this ill, you should perhaps start thinking about things like applying for PIP (which is not means tested). It's not always easy, and it can be time-consuming in terms of getting the application right or appealing if refused - but it is money for him when and if the employment ends, and money which does not impact on benefits.