Dear Manoharan,
Are you from HR? If yes then I request you to use the right terminology. In fact, whether from HR or otherwise, always we should check the meaning of the words before using them.
The dictionary meaning of the word "dismiss" is "terminate the employment of; discharge from an office or position". The dismissal has a negative connotation and the dismissal happens on the grounds of indiscipline. In your case, the employee is required to be removed on the grounds of his safety. Therefore, it is not dismissal per se.
Call the employee to your office and explain to him the current situation. Explain to him that attending to the office every day is a risk to his health and it in his interest to stop coming for the work. Ask for his resignation.
The separation from the employment is on normal administrative grounds therefore, he is eligible to get all his dues like leave encashment, gratuity, notice period pay etc.
Lastly, a word of caution from the organisation's culture too. If you remove the aged employee without due benefits, it will send a wrong signal to all other employees. As such his separation could give him sympathies. Amidst this, if you do not give him his dues then it will lower your companies image in the eyes of other employees. You should never allow this to happen.
Thanks,
Dinesh Divekar