As long as they get the job done on time and as specified, it shouldn't matter where or when the hours are put in. Some people like to get up early and can turn out beautiful shiny UML models while the rest of us are blearily trying to remember how to work the coffee machine. Maybe they like to pick up the kids from school and play with them in the afternoon, hitting the keyboard again after the tots have gone to bed. I also worked with a technical writer who was also a professional jazz musician. He would rise mid-afternoon, write until about six, and then come in to the office to talk to the development team for an hour or so.
Face time is important for the employee, the team, and the project manager.
I'm not talking about conducting that institutionalized waste of time, the status meeting. I'm talking about the social interaction that comes with sharing space with other people. Home workers can suffer from cabin fever. A good antidote is a regular lunch date for the team. It's a great way of keeping them together.