I would firstly discuss the options with Employer, PM, Supervisor and Subcontractor in the context of a risk reduction meeting (assuming NEC3 ECS) as you are concerned that the Subcontractor’s proposal may “impair the performance of the works in use”.
If the Employer accepts the Subcontractor’s work round proposal then you should allow the Subcontractor to implement it. If the work round doesn’t work then the Subcontractor is still liable to correct the Defect and maybe then it would appropriate to go for complete replacement.
If the Employer doesn’t accept the proposal and the Subcontractor refuses complete replacement, then you could instruct them. Normally that instruction would be a CE however you may be able to reject this under clause 61.4 as “fault of the Subcontractor”. However if the Subcontractor can prove their proposal would work then you and the Employer may have to concede CEs in your contracts if you insist on complete replacement.
Ultimately if the Subcontractor refuses to correct the Defect then clause 45.1 gives you the right to recover the cost of others correcting it and for the Subcontractor to pay this cost.