Suppose you have a cleaning woman in your home (that's the most likely employee anybody has). She cleans everything to your like, but you discover that, when you are not at home, she spends some time watching your TV. Or she leaves early.
You fire her, and hire a new one. She never does less than her time, and spends the whole time cleaning, but the end results are less satisfactory. Many things aren't really clean. You fire her too.
After some further trials you find one that cleans perfectly. If she has spare time, she uses it for extra chores like deep cleaning the backside of the fridge, and never misses a date. Regrettably, in six months' time she leaves you to set up a cleaning business.
Now you wish you had kept the first one.
Convert cleaning woman to engineer, If she's doing side work on 'your' time, and also doing her job properly, then you aren't giving her enough work. If she's not doing her job properly, it doesn't really matter much why, you should fire her. Anything else is a recognition that you cannot properly evaluate her work and so you are incompetent as engineers supervisor, and should fire yourself.