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Does "low engagement" mean "objectively not doing the job you are paying them to do"? Or does it mean "not going 'above and beyond,' aka not working unpaid overtime or doing things outside their job description"? Because only one of these warrants letting someone go.
In this case unfortunately it means "objectively not doing the job you are paying them to do." Like, core job duties.
I'd conduct exit interviews and ask them truthfully. For me, there's a decent amount of fucking around at our company- the same amount in person at the office as there is remotely. But regardless of location, our work always gets done, in decent quality and in a timely manner. (Gen Z/millenial + boomers)