At least from my experience with people that smoke, most smokers needs to do so on a very regular basis. So, I am paying an employee to devote their time in doing a job that they are getting paid for. So, why should I also have to pay so they can take a cigarette break every hour. I am paying them so they can smoke. This is unfair to me, and to expect to get paid even though you are outside smoking is a not morally sound.
Of course, one might apply this principle with using the toilet. In this regard – I will disagree. Smoking is a choice. You choose to smoke even though you are likely addicted to smoking. Excreting your bodily waste however is not a choice. If you need to go to the toilet, then you need to go to the toilet. I will also assume that you aren’t taking regular toilet breaks, and if you are, then there might be a health issue that you would have to deal with.