Any of this is conjecture
They don't know anything about him notionally giving a gift card to his dad and then notionally buying stuff on his behalf when they first called him in re gross conduct - they've merely seen a gift card being purchased using his discount then that discount being applied again when he used that card... that is what they called him in for initially and asked him to confirm he knew what the staff discount was... It seems likely that double dipping on the discount is the main issue... buying something on behalf of someone else is no doubt also against the rules but harder to detect and easy to workaround... while he's since admitted to doing this too it seems more likely it is the double discount which they're concerned about.
Perhaps, but it does appear if this is the case and his record otherwise is good and there is no specific reference to not attributing a discount to goods bought on a gift card the company is going to have difficulty in disciplining him.
The double discount is technically a flaw in the system itself (where giftcards attract staff mandated discounts) and while it could be argued that he should have realised it might be questionable, it is also not entirely his fault IF a few things are clarified:
A) Does it state anywhere or is it implied anywhere that staff using discounted Giftcards should not receive further staff discount on goods bought with that giftcard.
B) Did he apply the discount himself, or was the discount applied at the checkout by another member of staff (this goes to his defence)
C) Is there a defining policy whereby Staff Discount privileges are to applied only once in any transaction or related transaction. (Again, can it be reasonably assumed that discounting one item to attain a further discount on a subsequent item is seen as fraudulent)
Without some specificity as to the actual charge against him (misuse of discount privileges leading to theft is not enough as that can apply to anything he's said and more) we will find it difficult to advise him.
Given that the management spoke to him informally and then ensured Employee Relations made the decision to suspend implies that the company do have reasonable and verifiable grounds for his suspension and subsequent disciplinary under the terms of Gross Misconduct, which can lead to summary dismissal.
I don't think the giftcard is the issue, I suspect it is the application of the discounts to subsequent transactions that may be the issue, either by circumventing company policies (as shown in item B) or through breaking mandated policies such as those we have both spoken about.