Equally there could be beneficial aspects to working on different coding problems outside a main job- improving skills, learning new tools, whatever. But that's not the important thing. To me, the important thing for an employer should be performance: "I have these expectations for the role, how is the employee doing in relation to those expectations, and are they being paid over or under the market value for the position?" Even if the employee could be better if they didn't have a side project, figuring out balance and maintaining job performance are skills in and of themselves. If an employee can do that, great, if not, bummer. The external cause doesn't matter. What matters is the employee's judgement in the self care they need to do in order to meet the needs of their job. No need for employer to borrow trouble by trying to control non-work activities and incurring bad will.