A SHORT ANSWER would be that it is not permissible to be silent when one sees an evil action. The evidences for this is what Allah ﷻ said in the Quran,
The believers, men and women, are Auliyâ’ (helpers, supporters, friends, protectors) of one another; they enjoin (on the people) Al-Ma‘rûf (i.e. Islâmic Monotheism and all that Islâm orders one to do), and forbid (people) from Al-Munkar (i.e. polytheism and disbelief of all kinds, and all that Islâm has forbidden);...(9:71)
Let there arise out of you a group of people inviting to all that is good (Islâm), enjoining Al-Ma‘rûf (i.e. Islâmic Monotheism and all that Islâm orders one to do) and forbidding Al-Munkar (polytheism and disbelief and all that Islâm has forbidden). And it is they who are the successful.(3:104)
and this one more verse,
You [true believers in Islâmic Monotheism, and real followers of Prophet Muhammad ﷺ and his Sunnah] are the best of peoples ever raised up for mankind; you enjoin Al-Ma‘rûf (i.e. Islâmic Monotheism and all that Islâm has ordained) and forbid Al-Munkar (polytheism, disbelief and all that Islâm has forbidden), and you believe in Allah...(3:110)
From the above mentioned verses it's clear to us the obligation upon oneself to forbid evil and enjoin righteousness but one has to understand that this does not comes without any strings attached as that's what this Hadith implies.
There are degrees or levels as to anyone can practice this, some maybe able to follow this command more than the others (based on their capability),thus as fairness prevails in every aspect of our deen, that's where this Hadith draws the boundaries.
A layman's example of this would be something like, as a bank clerk is not able to pick up arms and go fight in a war as the soldiers of an army can but that clerk can protest with his tongue and if he is not able to do that,(reasons can be many) that person can always hate it or disapprove of it with his heart.
UNDERSTANDING THIS HADITH is very important in our time of age now, as the world is full of evil all around. As I have previously mentioned the verses that obligates every one of us to try and mitigate these evil accordingly. The reason why I mentioned accordingly is because Allah ﷻ has said in the Quran,
Allâh burdens not a person beyond his scope. He gets reward for that (good) which he has earned, and he is punished for that (evil) which he has earned...(2:286)
Keeping this in mind, let us examine this Hadith further as you have asked in the question. The first thing we should understand about this Hadith is,
"Whoever of you sees an evil action"
The Prophet ﷺ , said “Whoever of you…”, this means that the command is directed to each and every Muslim. Everyone has the obligation to forbid evil if they have the means to do so.
And now regarding what you have asked about,
"If he is not able to do so"
We can see that the command to change an evil with one’s hand is conditioned by one having the ability to do so. If one is not able to do so, then they are not obligated to change it with their hand, and move down to the next level of trying to change it with their tongue. It is therefore important that we understand what is meant by the inability to change an evil. The capacity to change a wrong is of two types. The first is a ‘spiritual’ non-physical capability which is related to knowledge, and the second is ‘physical’ capability, meaning we must have the physical capability to carry out the act in a safe manner.
To further elaborate on this point, I'll quote another citation,
Everyone has different capabilities when it comes to changing evil. Some have the ability to change it with their hands, whilst other do not have that ability. If we do not have the ability, we are not sinful due to this shortcoming. However, there is one level concerning which everyone has the ability, and that is changing an evil with your heart. ‘Changing it with the heart’ means that you hate the evil in your heart, and if you had the ability to change it with your hand or tongue, you would.
IT'S CLEAR from what I mentioned that's it's not permissible to stay silent at all.(keep in mind that hating with one's heart is not considered as being silent). there are some scenarios which scholars have mentioned that might force a person to shift forbidding evil from hand to tongue to finally heart. And these scenarios are considered with respect to the spiritual and physical ability of the individual. I believe it's worthy to mention them here as this Hadith cannot be fully fathomed if we do not shed light on these scenarios as well, in Sha Allah.
01The person believes they can remove the evil and fears no harm, but changing it will lead to a greater evil – This person is capable in both the physical and spiritual sense, but is not obliged to change the evil with their hand due the the feared negative consequences.
02The person can remove the evil with no fear of harm but expects equal negative consequences – The person is considered capable, but the scholars differ as to whether the obligation still applies. The person should make the decision they consider best.
03The person does not have the knowledge to recognize whether or not the act they are witnessing is evil – The person is not qualified or capable of stopping the act.
O4The person can remove the evil without any resultant evil, and they fear only verbal abuse – They are fully capable of removing the evil and they fall under the obligation of this hadith. Fear of verbal abuse is not an excuse for one to move to the next level of changing the evil with one’s tongue.
05The person has the physical capability to act, but they believe that this action will not result in removing or lessening the evil, and they expect that they may be harmed in the process – This person is considered not capable to act and they move down to the next level of obligation.
06The person can stop or lessen the evil and they fear no harm or resultant evil – They fall under the command of this hadith and they must act to stop the evil with their hand.
07The person believes that they cannot stop the evil by acting but they also fear no harm or resultant evil if they do not act – This person is not completely capable. Some scholars say they must still act, whilst other say that it is simply recommended.
08The person can remove the evil, but they know that harm will come to them if they act. - This person is not fully capable of acting and may resort to removing the evil with their tongue, however, if they do act, they will be rewarded by Allah
With these scenarios, we have a more clearer understanding of the application of this Hadith.
I would like to mention a Hadith before I conclude,
There is no people among which evil is committed and they have the ability to change that but they do not change it, except that Allah will soon afflict them with a punishment that will affect them all.” (Recorded in Sunan Abu Dawood)
all the citations and scenarios are taken from commentry on the forty Hadith of Al-Nawawi (volume 3) by Jamaal al-Din M. Zarabozo.
May Allah the mighty and sublime grant us mercy and guide us to the straight path.
Allah knows best