If a long day care setting can you allow a baby under 1 year old to have a dummy provided by the parents in a cot room separate to the play area or do they need constant supervision when they have the dummy?

It is ok for a baby to use a dummy if that is there usual sleep/settling practice.
Are you referring to the Red Nose article on dummy use that says:
Parents who wish to use a dummy should do so only for sleeping periods and by the end of the first year of life dummy use should be phased out
https://rednose.org.au/article/using-a-dummy-or-pacifier

This research is related to a lower risk of Sudden Unexpected Death in Infancy (SUDI) when using a dummy.
For babies when parents are introducing a dummy only to reduce the risk of SUDI, these babies then do not need a dummy after 12 mths as SUDI does not occur after 12 months (by definition)
The article also states:
Dummies should definitely be discontinued by 2-4 years to reduce the risk of dental malocclusion.

There is no reason for increase supervision of a sleeping baby, outside of the usual regulations, whether baby is using a dummy or not.