Being arrested is not a proof of his guilt. Only court of justice can decide on anyones guilt. Period.
Duty of care, even in such impossible situation, is entirely on the university, but they decided to relief themselves from it. If i am their student, i will immediately go another uni, because the admin of this obviously cares about thenselves, not about theur students.
Whatvif he dud not do it? f he is innocent? He goes free in few months. What then? He will sue them for several mullions. Who will cry that it is unfair, then? I wont. I will say it is justified, they worth to pay hefty compensation, in this case.
He could have been suspended from his PhD study, for up to a year, even longer. It is not an employment, as you say, it is a study. I took a year off my PhD study when I had to, no problem..No harm will be done to anyone to suspend him until is clear where this goes.
I hope I managed to answer your questions.