I can entirely see how a company would initially see this as a problem. They are paying someone to do a project on the side that will likely never bring any money back to the company. In many companies, theres a policy that says anything you create while on the company dime or while utilizing company facilities, equipment, etc, is the property of the company since they have in essence paid for it by paying you.
I've seen people pushed out for this before and I've seen the same companies struggle to fill the hole they just created. The person provided a significant benefit to the company and was efficient enough to not really need to focus on anything company related for a few hours of the day. During this time, the employee did several side projects, some for small monetary values, others for free. It would seem easy from a business perspective to just assume that maybe they should just cut hours back if the employee doesn't need a full day to complete the tasks. This would provide the time for the employee to do these projects but this typically also comes with a reduction in salary.
The aforementioned employee saw their own work as highly valued since their salary was very satisfactory for the required work. However, when management stepped in and said they were reducing the number of hours the employee would work, and to reflect the "reduced work provided to the company" a reduced salary as well. The person was expected to continue performing at peak efficiency as they had, with a shorter day and a smaller salary. This was understandably taken as a perceived reduction in the value of this employee.
I think its important to mention that this person, largely enjoyed their position and did it exceptionally well. They had never had a bad evaluation, never been written up in 10 years despite having worked on side projects for most of it, and never let the side projects interrupt their daily duties. I think the side projects really provided a good creative outlet for this person and it helped motivate this person throughout their day.
Anyway, the person was pretty pissed off about the situation and stayed on maybe 2 weeks after this change before quitting. Management had a big "oh fuck" moment too since the person had a lot of knowledge that wasn't always well documented. Took them a year and a half to find a schmuck that was willing to try and work in the reduced hour position and he lasted all of a few months before being fired for not being able to perform the duties (big shock). So they decided to contract it out and pay a shit ton more than they used to.
While it presents an ethical dilemma, I think the greater perspective on the matter must be taken. Physically and mentally healthy employees are always going to perform the required tasks better than people deficient in either. Sometimes all that is needed is a good self driven but compensated outlet to provide that and I think we will see this to be much more true in situations where true UBI comes to fruition.