They need to rip those walls out and put up cement board. Water will always get past the grout as it is porous. If a crack develops water will definitely get past. I have never met a professional tile setter who used drywall under tiles, in wet areas. The challenge is something like Hardi-backer is .042 and drywall is .5, so shims need to be used on any wall that have both types of boards.
Where did they waterproof? Behind the wall with plastic? Or did they use something like Redguard? Or both?>YIKES!
If not fully completed yet my recommendation would be to put a halt to the project, get a second opinion from a well respected tile setter, and fire the first outfit, and hire the second without paying the first outfit, much if anything. If they take him to small claims court, file a claim again them, and use the photos of the poor install along with the written letter the second opinion hopefully gives to get the job. Along with any web research. There is a ton of information on the web available.
Never do I approve of hack work when charging for it. Unfortunately the job will last just long enough to make it past any warranty, then fail causing more damage to the home structure from mold and water damage, that may go unseen or noticed until it is too late.
Heck we can't even get green board anymore, it is all purple these days.