An employee may be offered the option of their employment being 'retired' on grounds of ill-health.
Where the employee is a member of a pension scheme there may be terms of the scheme which allow pension payments or benefits to be paid on grounds of ill-health. However this will depend on the pension scheme allowing such a claim and it may not be within the control of the employer to grant the pension. Power to make decisions may be shared with, or solely, that of the trustees of the pension scheme.
An employee will therefore need to take great care that they will qualify for early payments, how much they will receive and what conditions are attached.
Some pension schemes will require the employee to be unfit for any work at all before they accept that benefits are paid; in contrast some may only require the employee to be unfit for their own job.
It is likely that the employee will also have to be unfit to work thorugh ill-health at least up until the normal retirement age under the scheme.
Decisions to refuse pensions can be challenged but usually the trustees will have had to have acted outside the rules of the scheme or failed to propoerly considered the evidence for that to be successful.
No entitlement to an ill-health pension
In some cases an employee may have no pension scheme to make payments if employment ceases.
In this case the contract of employment is being terminated. If the employee agrees to the termination then it will not be possible to make a claim for unfair dismissal or complain about discrimination in a dismissal - because the contract has ended by agreement not by dismissal.