I think you have two options -
1. Termination
or
2. Have the manager make sure she only works the hours she is supposed to. If she works 8 to 5 with an hour for lunch then the mgr makes sure she starts work at 8am (and not a minute before), leaves for lunch at 12pm, returns at 1pm (and doesn't work at all in between 12-1pm), and leaves right at 5pm. It will be a pain for the mgr but if the employee doesn't get the hint then termination is the other solution.
I actually had a mgr that did this with an employee. This employee got the hint very quickly because it was embarrassing to them that the mgr was always around her. She was an awesome employee otherwise, very dedicated, always at work, but couldn't get the hint that she needed to work only the hours that had been set for her.