I am replacing my tile upstairs outdoor balcony with wood decking. The tile deck has a Hardiboard underlay for waterproofing. Will the contractor need to remove the tile and Hardiboard before replacing with 5/4 board PT wood decking?
Although hardibacker board is a superior underlayment material for waterproofing I don't think it's designed to actually have water sitting on it very often. It is mold resistant but in reality it doesn't see water very often. I think the porous surfaces would fill up with organic compounds and allow mold and other funk to start growing. That being said I don't think I would remove it I would consider covering it with a smoother waterproofing membrane like Blueskin. Just to clarify covering it with the deck will allow dirt water and debris to accumulate and that will make short work of the grout. Then you've got a bigger problem, especially in cold climates. Water will work its way in freeze and pop tiles are so on.
Hardiboard (concrete backer board) is water PROOF, but is not water RESISTANT. The semantics are important. Water PROOF means water will not harm IT, water RESISTANT means it will protect other things from water. Hardiboard can be used UNDER water for upwards of 50 years, but water goes THROUGH it if given enough time. So when used as tile underlayment, it is the TILE that is water RESISTANT, then the Hardiboard underneath it, being water PROOF, will not be harmed by anything that might leaks through cracks or the grout etc.
So the other question of "What is the hardibacker sitting on top of/attached to?" is relevant in that if it is a porch that is overhanging an empty open area to where there are no structures that might be harmed by moisture that gets through the Hardiboard, then you could leave it in place. If not, then you will need to water PROOF the area under the new deck. And to Joe Fala's point, leaving the tile there as the water PROOFING element, when you cannot periodically clean it because of the new deck, is not going to work in the long run.