A few questions I had while reading this are:

Does the work afford the possibility for the employee to to come and go through the day? Is there flexibility such that you could work 9-12, then 3-7, then 10-12, so long as in a 24 hour period you were working 8.5 hours. In other words, are you measured by results or hours?
Are you concerned about losing this employee because they are critical or because of the circumstances and a desire to “do the right thing” or be the “good guys”?
Have you been diligent in documenting everything to date?
On the basis of what you have expressed, here are our thoughts.
First, it seems you have done everything and more to accommodate the employee, including developing a return to work plan, for what we assume would be some type of caregiver leave – although you have not specifically addressed whether or not this has been medically diagnosed, where you would be legally bound to accommodate.
Secondly, the employee has not held up his end of the RTW plan. I am sure that the PTSD issues at home are a struggle, and I am empathetic, but he is an employee and work needs to be done.
Third, it seems this is having a negative effect on the culture. Other employees are probably frustrated with the exceptions to the rules that are being afforded to one employee. They are probably unhappy with having to cover work or not being able to depend on a colleague. They are probably unhappy with the daily uncertainty, will he be here today or won’t he?
It would seem like you are at a real risk of wanting to be a “good guy” with one employee and unfortunately coming across as the “bad guy” to all the rest of your employees.
There are two obvious options you can take, each with a certain degree of risk.

Make the employee 100% remote, either contract or employee, and managed by results not hours. I don’t know if the work affords this type of transition (software development, writer, etc.) or not, but if it does and the employee is a good worker when they can work, this may be an option to look at. Of course transitioning an employee from full-time employment to a contract position means a new compensation and management model, as well as tax and benefits implications, but it can be done with minimal downside if both parties are amenable to it.
Terminate the employee. You cannot run a company by managing for one employee. You have accommodated (it would seem) and it appears as if you are experiencing undo harm, at least you have a very strong case for it if the employee was to file a wrongful termination suit. This will show the rest of the team that you support their personal needs, but to a point, and that you have a business to run, where rules are rules, work needs to be done, and the team has to depend on each other while also being accountable to each other. However, if this is the option that you pursue, we cannot stress how important it is that you had the RTW plan and all conversations documented.
The best option here might be for the employee to take a leave of absence for caregiver leave where he and his wife can get the support needed and a realistic plan that allows him to return to work in a full-time capacity.

Meaghan Wilkinson replied 1 year agoEdit Delete
Hello,

To answer the questions above:
1. Employees need to be available to from 9:30-3:30 our core hours. This is the time we request that everyone is to be in the office.
2. He is a good worker and completes all his work – at this point HR is ready to align with policies and terminate – the managers don’t agree with it
3. We have conversation and documentation in for everything on this one.

Thank you very much for the suggestions.