If they're hourly, then yeah, billing 40 hours a week when you only did 2 is fraud. If salaried, I think it's okay.
Here's why: Individuals in the company will be good or bad, ethical or unethical. The company itself will (likely) be largely amoral and driven solely by a profit motive.
So when this person announces that he's automated himself out of a job, it sounds like it won't be a matter of 'great work, here's a cut of all the money you saved us and some more interesting work.' It'll likely be a matter of 'thanks, here's your contractually required severance.'
That is what it is, but if the company is allowed to be driven by profit motive, he should be too. It is within the best interests of his profit motive to continue with the automated work. For some reason when the person is an employee, it's no longer okay to be a sociopathic profit-motivated machine, we're actively disgusted by this type of behavior.
It seems like there should be a fairness principle in this situation when making a decision about things such as this that treats the employer and the employee as equals in a contractual obligation.