Are you serious? An employer that doesn't know about UK employment legislation.
Start by looking at the stuff in Business Link - the government organisation for smaller employers.
http://www.businesslink.gov.uk/bdotg/action/de tail?type=ONEOFFPAGE&itemId=5000733949&site=10 2
Then check out the rules on unfair dismissal within the site, or on the ACAS site, once you've got your head around setting a plan with the employee and managing him/her against the plan.
You would normally consider dismissal on grounds of capability, if the employee continually fails to attend on grounds of various sickness absence reasons.
Rules on paying statutory sick pay you will know about from your PAYE procedures. Whether you pay more than that, or for what maximum period of time, is up to you - as described in your company procedures.