I am an employer and would like to know while an employees is out on short term disability for maternity and has reached her 26 weeks but was not released to work can you fire that employee.

Unless you have a legally binding contract or CBA that specifically says otherwise, yes.

N.J. state disability -The maximum number of weeks allowable for any one period of disability is 26.
N.J. Dept. Labor & Workforce Development:
Can I collect for pregnancy -Yes. Eligibility for temporary disability benefits due to pregnancy is determined in the same manner as for any other disability. You must meet the wage requirements and your physician must certify that you are disabled.

How long can I collect benefits for my pregnancy?
For a normal pregnancy benefits are usually payable for up to four (4) weeks before the expected delivery date and up to six (6) weeks after the actual delivery date. Benefits may be payable for a longer period if your doctor certifies that you have a specific complication related to the pregnancy; you have a Caesarean section; or you have another simultaneous disability.

Is my employer required to hold my job for me if I stop working due to pregnancy?
The New Jersey Temporary Disability Insurance Law does not require an employer to hold a job for someone who is on disability. However, you may have job retention/protection rights under other State or Federal Laws. (ie N.J. FLA, FMLA)

Yes, you can terminate them - they would have no job protected leave of any kind left. (unless there is a binding employment contract or CBA to the contrary or if you would allow some one who is out on disability for other than pregnancy longer than 26 weeks, you would have to allow her longer also- you can't discriminate due to the pregnancy)